HelloWallet targets low and middle income users, those, who need careful planning and professional advisory how to keep their finances under control. And this is exactly, what HelloWallet does. It is a for fee service (membership is 8,95 USD/month) but they generate a real value for the customer. Interesting to see, how!

 HelloWallet’s value proposition is based on three pillars

• Financial data management and reporting
• Financial education
• Financial advisory

 Pillar 1: Financial data management 

HelloWallet is an independent service so it has to be fed with financial data. The users can enter their financial data in 3 different ways to the system:

• They can connect their bank account directly from HelloWallet
• They can enter financial transactions manually
• They can upload their Quicken data

It is always a big issue for third party providers how to feed the solution with data: if it requires lot of manual efforts, then it reduces the usage of the tool. But HelloWallet offers direct access to lot of financial services providers.

“This is the beginning of a beautiful friendship.”

HelloWallet offers all the “must” PFM features, like categorization of the spending, setting up budgets, creating savings goals, analysis and reporting. The charts are nice; however, I found some of them a little bit too complex. 

Setting up savings goals is a general feature of PFM software but HelloWallet does it in a very sophisticated way. The savings goals feature has different categories, like education, rainy day savings, house goal, retirement goal or debt goal. Each goal is treated differently and you receive advice why and how to set up them. It is very nice that there are default values you can choose from! It makes the process easy and smooth and you have the feeling of a real advisory process. Default values come from your data or from benchmark data. 

Piggy-bank for pauper times.

Pillar 2: Financial education

HelloWallet puts a big effort in educating the customers how to manage their finances. Email learning is one of the tools they use: they regularly send advices and hints, how to improve financial situations. When setting up your account, a 6-month email course starts teaching how to “build wealth”. Webinars are also used to educate users, how to use HelloWallet.

How to become Scrooge McDuck.

 Financial advisory 

Financial advisory is an important asset of HelloWallet. The advices come up proactively, after the login page or in emails. Some of the advices are based on the user’s financial situation, some are not. 

Hints, tips & tricks.

Do not forget, that the users of HelloWallet are not financial expert at all! An average user will appreciate the advices, coming from HelloWallet – advice is even more important for him, than a report, with full of numbers and charts. Banks usually provide a big load of figures and reports, and they let the users analyze them and take actions based on the figures. But for the average user it may be too challenging – he does need exact advice, what to do and why. 

Highlights of HelloWallet 

Highlight1: Proactivity 

Compared to similar services, HelloWallet is very proactive. They act as a real advisor: They give exact ideas on how to improve your financial position. If you enter to the system, you get hints what to do and why. Default values (e.g.: when setting up a new saving goal) also support the users.   

Highlight 2: Social benchmarking 

Benchmark data are very interesting and useful. The user gets ideas on where he should improve, and where he is outstanding in his group.

Benchmark data are very motivating. 

Highlight 3: User experience

I hope that the screens above convinced you that HelloWallet is a thoroughly well designed service with a great usability. You do not need to be a banking expert to understand and to capitalize on this service which is a very important success factor of the service! 

+1:

The concept of HelloWallet is very clear, and the functionality is very well aligned with its mission and with the target group. This is a very important success factor and ensures a high user engagement. 

There are still a lot of interesting features to explore with HelloWallet, so you may want to use the benefits of the one month free membership!

The survey is obviously not representative, but it is still worth having a look at the most interesting questions and answers. Due to the easier visual explanation, the displayed answers are only yes or no on the site. I made a selection from the survey. Please not that 44% of the respondents live in he US.

Questions about mobile banking:

• Would you use your mobile to Bump money to a friend? – 85% said yes
• Do you buy things with your mobile wallet? – 26% does
• Is your bank’s app on your smartphone? – 64% said yes
• Mobile banking is not the distant future – it IS here!

Questions about payments:

• Most of my purchases are made with my cards. – 89% said yes
• Do you know what NFC is? – 94% does know it
• Have you ever made a contactless payment? – 54% have
• People are aware of new, innovative payment methods, and they do use them!

General questions about banks

• Is your bank cool? – 87% disagrees
• Do you open your bank statements? – 53% no (me neither)
• Well, people are not attached to old school banking.

You may want to check all questions and the answers, or Movenbank’s portal.

Internet banking: focus on user experience

Internet bank is the ideal channel for sales and communication purposes: customers are fully identified here, and they visit this channel on a regular basis. Do you know any other industry which possesses a similar great online service point?

However internet banks were mainly designed for transactions and not for a sales and communication platform. In order to fulfill this new role and shield the online channel with better sales and communication capabilities, the user experience of internet banks should be improved; it should be increased to the level of web shops, online booking systems. Because the visitors are educated and indulged on these type of portals and they expect the same level of user experience from their banks. This is a huge but unavoidable challenge for banks for the coming year if they want to use this channel for sales and communication purposes.

Over and above, personalization and CRM capabilities are also important for this channel, so I expect a lot of development in this area.

Mobile banking and mobile payments

Mobile banking is the rising start with a huge potential. The easy to use and smart devices, the high data transfer capacity of mobile networks and users’ habits have opened a new space for the mobile services in every industry. And mobile is not restricted to smartphones any more: Morgan Stanley says that 27% of iPad purchases will be made instead of buying a desktop PC and 44% instead of buying a laptop in 2012!
As people get used to do everything on mobile devices, they expect the same from their banks. It is not only a must but also an opportunity for banks as they can use mobile as an excellent sales channel. Therefore location based marketing and location based services will also be a key issue for banks in the coming year.
Mobile banking and mobile payments seem to diverge: while banks offer more and more solutions for mobile banking, mobile payment services will be dominated by non-bank players like Google or the mobile network operators. The big question for banks in 2012 is whether they find their role in mobile payments.

Personal Finance Management: an opportunity now, a must tomorrow

Personal finance management has been here for several years, but only few banks have started offering this type of service. But now banks seem to be willing to implement PFM: just to mention one global player, Citibank went live with PFM this October. What has happened? Since the importance of the online channel is skyrocketing, it is vital for banks to differentiate themselves on the online channel. And PFM helps banks to get to know their customers better and we should not forget about the sales opportunity provided by PFM.

Banks have 1 or 2 years from now to make a quick move and start offering PFM. If they do so, they will gain an advantage on the market. If they delay implementing PFM, the market will force them to do so.

Online sales

There will be no bank in 2012 that can ignore the online channel as a sales channel. The portal (and microsite network) is responsible for customer acquisitions, while internet banking and mobile banking are great channels for cross sales.

Selling online however, is not only an issue for the electronic channel: this affects all areas in the bank from the product development to the internal processes. Successful acquisition requires streamlined customer origination processes (including branchless account opening) while successful cross-sales depends on personal and pre-approved (if applicable) offerings.

All in all: online banking will be one of the strongest factors which influence the entire financial services industry in 2012. I expect an exciting year in 2012!

Personal Finance Management – what is it about?

PFM is a software application which helps people keep their finances under control. In this application, you can see reports about your finances. The reports are based on the transaction history data or on the data which were entered by the customers manually.

The core element of every PFM solution is the categorization of the spending into different spending groups like household costs, travel costs etc. The expenditures can either be assigned to the standard categories of the software or the user can set up own categories. Most PFM solutions offer the opportunity of assigning limits to each category (e.g.: I do not want to spend more than 250 eur on clothing this month). As a further value, you can create automatic alerts; for instance you receive a warning SMS message when your clothing expenditures reached 200 eur.

You can also set up savings goals by saying: In the next three years, I want to buy a car for the value of 8000 euros. And then, the user can assign an investment or a savings product to this savings goal.

A third common feature of PFM is a report on the value of your assets and liabilities. This can include all financial products you possess at your bank, however, some applications make it possible to add further objects (e.g. property) to your portfolio manually.

Most solutions include forecasting tools, like projected available balance by the end of the month.

Peer comparisons are also offered by the most vendors, which mean that the users can compare their finances to the average of their peer group.

What is the return of the bank?

You can find the following benefits on the bank’s side:

-PFM will soon become a must. Meanwhile it is still a nice-to-have service today, it is a key differentiator in the online banking services market. Several banks, who implemented such service a few years ago, are upgrading it now, which clearly prooves the importance and value of PFM service.

-PFM increases both the usage of the online banking services and the customers’ loyalty.

-Banks who offer PFM has found that customers, who use this service on a regular basis, prefer electronic transactions to cash payments. The reason behind this is that electronic payments are categorized in PFM automatically, while cash spending have to be added and categorized manually by the customer. So, using a bank card for payments saves time and effort for them.

-PFM data also offer a deep insight for the bank into the customers’ financial position. This information can be used for targeted offers or for monitoring the customer’s creditability.

-Sales opportunities: cross sales offers a clear return on PFM. This is THE business case for PFM however most banks do not exploit this great opportunity.

Is PFM a software for the bank or for the end-user?

There are PFM solutions which target the end-users and there are other ones which offer PFM application for banks.

The most obvious way of implementing and offering PFM is if banks provide this solution as an add-on to their internet bank. However there are several out-of-the-box PFM software, which can be purchased by individuals. A review of the best PFM programs can be read here (http://personal-finance-software-review.toptenreviews.com/). This review was made by a US company and the introduced software have a price range of 20-60 USD per licence.

This business model is only successful when the banks offer their data via standard interfaces (e.g. in Germany, UK, Italy). In these countries, the PFM application can take the financial data automatically from the bank. If such standard data traffic is not available than the customer has to enter his spendings manually, which frightens most of the users away. Furthermore, these applications cannot offer such interesting features like peer-to-peer comparisons.

What to do, banks?

Banks will not remain unaffected by this trend. If a bank decides to implement PFM now than it has few years to capitalize on it. Offering PFM will become a must within few years, and hopefully banks will not wait until customers leave them just because they miss this service.

How does it work?

The user registers for this service on www.offermatic.com. Second you add your debit or credit card to your account. In the third step you login to your bank account (using your internet bank password). As an example you can see below how you log to your Citibank account from your Offermatic account.

After the login to your internet bank account, your card transaction data are automatically downloaded to your Offermatic account.

Offermatic analyses your spending and selects the best merchant offer for you from their database. They do not bother you with random offers day by day but one targeted offer once a week. If you accept the special offer, you can “download” it to your card, and it will be credited on your card account after your purchase.

I am wondering why banks do not offer similar services?