Banks Helping Consumers Manage Money Now More than Ever
Consumers are concerned about their cash now more than ever. Since the recession, consumers have become vigilant over their finances. Most banking institutions offer the minimum in money management online, but since the recession made money a priority, they are working even harder.
Money management online
Banks are offering customers pie charts and amortization schedules to get a clear view of their money. The reasoning is that customers who are more in control of their money will see banks as more viable financing tools. That means when they need loans or new retirement account, they will be more likely to work with the bank that offers them online tools to manage money.
Michael Upton, senior VP at Bank of America, (see http://www.msnbc.msn.com/id/35018578/) said, “The more informed customers are about their financial lives, the better customers they make for us in the long term.” Many banks today are taking their online model from Mint.com. Mint is a website that offers consumers the ability to merge data from various sources and give a clear picture of their finances. It gained a huge popularity and industry insiders were watching closely the capabilities the website offered.
Online banking on the rise
Industry analysts are showing that about 60 million people do some type of online banking in the US. The number using personal finance management tools is much smaller, but banks are hoping to turn that around. Although right now less than half of all US banks offer personal finance management, smaller banks and credit unions are quickly moving into the online territory. They understand how important it is to offer additional services, and they know how much focus consumers are putting on their own personal finances now. Upton added, “The recession was a good lesson for people who didn’t prioritize their savings. Now a good number of consumers are changing their ways.”
How the larger banks fit in
Interestingly, bigger banks are not moving as quickly to utilize personal finance tools. It’s the smaller banks that are integrating them. The reason for this is that larger institutions have more elaborate features, and the ability to combine account data could take considerably longer to implement. For customers using large banks to watch their money now, it involves combining systems from serial mergers. That’s a large task for any institution to take on. For example, Wells Fargo has a “My Spending Plan” tool that categorizes spending and has a budgeting script. It only is able to pull date from the bank’s accounts though, which some say limits its usefulness to the consumer. That’s because it is common for people to have a dozen or more accounts with various banks, brokers, and credit card companies. “Consumers want to simplify their financial lives,” said Mark Schwanhausser, a senior analyst with Javelin Strategy and Research. “There’s a screaming need for someone to come through and help them organize, and pull all that account data in one place.”(see http://www.msnbc.msn.com/id/35018578/)
The next step in banking
Schwanhausser said that to serve the customer more, banks need to make their personal finance tools more prominent to the user. Consumers watching their money now want a much more diverse and flexible resource. In today’s high-tech world, it’s crucial that banks keep up. Offering finance tools that are customizable and draw all account information to form a complete picture of finances is the next step to serving banking customers.