Building upon the success of Benchmarking Mobile Banking in Switzerland Today, Capco Digital is following up with several deep-dive blogs on selected topics from the survey. 

While offering PFM functionalities is standard in today’s competitive market, the current customer engagement rate leaves much to be desired. Its potential is indisputable. Yet, a shift of focus from providing insightful information to action-oriented recommendations is key for success. 

CURRENT FOCUS ON INFORMATION 

Although an informative personal finance management (PFM) functionality based on account information and customer transactions is considered a basic feature nowadays, not all banks offer it across their mobile and e-banking channels. Our benchmarking indicates the following three functionalities as status quo in today’s market: 

• Categorization: Categorize transactions and split bills into different standardized or custom defined expenditure groups such as groceries, entertainment, travel and others 
• Budgeting: Set monthly budgets (overall and per category) to control total spending 
• Track savings goals: Define specific saving goals over a certain period and track its progress. 

Indeed, in reviewing 16 traditional and challenger banks across Europe and Switzerland, we see that Swiss banks and challengers are currently leading the away in offering these three PFM status-quo functionalities. 

BANK  TRACKING SAVINGS GOALS  CATEGORIZATION  BUDGET  

The main challenge is that data sources are often unavailable or the integration of relevant data into legacy systems is complex. This gets even trickier when taking the PFM capability to the next step and enhancing it to an intelligent, trusted, and action-oriented PFM. 

INCREASING VALUE THROUGH AUTOMATION, PREDICTION, AND ACTION-ORIENTED RECOMMENDATIONS 

For PFM tools to make intelligent and action-oriented recommendations, banks need to have solid, automated data models to understand their customers’ spending behavior and predict their financial situation. Therefore, the following capabilities are needed as they do not only offer increased benefits to customers but also to banks due to increased upselling opportunities: 

• Identify customer preferences and offer personalized offers, e.g. a client with a considerate amount of monthly savings can be made aware of suitable investment opportunities to optimize his or her 3rd pillar retirement planning. 
• Trigger alerts to showcase the impact of certain transactions, e.g. inform the customer that considering expected monthly expenses, the purchase of this new TV might pose liquidity issues at the end of the month. 
  As most customers have more than one banking relationship, gaining a holistic view of a customer’s financial situation is challenging. This even gets aggravated when considering most banks’ current data structures, as it makes it difficult to normalize and map the different types of data. In order to maximize the value for banks and customers, however, all dots need to get connected. 

THE WINNER TAKES IT ALL 

The European-wide PSD2 is a first enabler for such an ecosystem, allowing to aggregate internal and external account and payment data. This allows customers to manage all their financially dependent activities with a single preferred vendor. From a service provider’s perspective, it is, therefore, crucial to be that chosen vendor who owns the direct customer relationship and is at the source of customer interaction as well as information. 
Customers will not only choose the best value for money offering but also the one with the greatest user experience across the digital channels. 

OUR RECOMMENDATION 

As banks are forced to open customer data to third parties and ecosystems are being built, being the primary customer relationship owner becomes more relevant than ever. Thereby, a comprehensive PFM capability plays a crucial role. Although especially Swiss and challenger banks rank high in terms of functional scope, many banks are still working on getting the foundational data structures to aggregate internal and external data right. 

While challenger banks might have a slight advantage in terms of customer experience, Swiss banks are in a good position as they have strong customer trust, life-long relationships and huge data pools to leverage upon. However, everyone now needs to level up and focus on providing automated, predictive, and action-oriented recommendations to remain relevant to customers, and to win and own that primary relationship within the ecosystem. Whoever wins that race, is well positioned for future success. 

CONTACT

Nils Reimelt, Managing Principal 
M +41 79 135 85 22 
E nils.reimelt@capco.com