Mercator Blog

Growing Need for Mobile-Based PFM Tools, Especially Among Young Adults
Date: March 11, 2015
Karen Augustine
Manager, Primary Data Services
Today, even in a relatively strong economy, maintaining closer control over personal spending is a priority, especially among the young. Money management has become more important for many consumers. Mercator Advisory Group’s CustomerMonitor Survey Series research finds that nearly 2 in 5 of the 3,000 U.S. consumers we surveyed in 2014 reported using financial advisors, marking steady growth in usage from just 1 in 4 who reported using advisors in 2011. While fewer consumers indicated they had wealth management relationships with their financial institutions than indicated they had used financial advisors, more than 2 in 5 young adults (aged 18 to 34) reported having a wealth management relationship. In fact, young adults are twice as likely as seniors (aged 65+) to have a wealth management relationship or account at a financial institution.

Our latest research suggests that 35% of U.S. consumers (and over half of young adults and high-income earners whose household earns $100,000 or more a year) used online personal financial management (PFM) tools to evaluate spending and to plan and adjust bank accounts and investment portfolios in 2014, and 1 in 3 reported their use of PFM tools had increased within the previous year, which is more than reported such increased use in 2013. While most of these consumers use PFM tools on their computer, since 2012 more consumers are using PFM tools on smartphones and tablets.

An upcoming Insight Report from Mercator Advisory Group CustomerMonitor Survey Series which addresses mobile and tablet banking highlights the remarkable shift in consumer preference for and use of mobile platforms for banking activities. While 3 in 4 U.S. consumers surveyed still prefer to use a computer to make electronic banking transactions, 1 in 10 prefer to use tablets and 1 in 6 prefer to use smartphones to perform their banking transactions.

For many consumers, simply tracking spending is no longer enough, and they are looking to PFM tools to provide a wider scope of money management functions. Modern consumers rely on financial applications more and more to help them stay on track fiscally, and that presumes sophisticated analytics designed to help them figure out saving versus spending in an easy-to-use format. Consumers increasingly expect to perform these activities on their mobile device when they are considering making a purchase, wherever they may be.

Growth in PFM capabilities at financial institutions has historically been slow despite clear indicators that consumers are becoming more budget conscious. Some large and progressive financial institutions now offer mobile-based PFM tools with their checking accounts with the option of upgrading to more sophisticated functionality for a monthly fee as a way of engaging high-value customers, strengthening their customer relationships, and stimulating account activity. Financial institutions that offer advanced PFM tools will gain a better understanding of customer spending behavior, knowledge that they can use in turn to influence customers’ financial services consumption and to cross sell products and services, thereby further monetizing account relationships in the future.

A report on mobile and tablet banking will be available in April 2015 based on survey data from November 2014. It will present our latest survey results, updating our findings on the demographics of the consumer shift toward mobile banking platforms and the growing need for PFM tools that were presented in Mercator Advisory Group’s CMSS Insight Report, Mobile and Tablet Banking: Key to Customer Retention. The reports are based on an annual online survey of 3,000 U.S. adults reflective of the U.S. Bureau of the Census demographic profile and accessible by CustomerMonitor Survey Series members. More information on impact of PFM on the state of online banking can be found in the Mercator Advisory Group report from our Banking Channels Advisory Service titled Next-Generation Online Banking: Mobile, PFM, and Bill Pay. An updated digital banking report by the Banking Channels service is scheduled for publication in June 2015.