Finovate Europe 2011 : Part 1 [Overall impression and PFMs]

As you may have seen on this blog or twitter, I had the chance to participate to Finovate Europe. Thanks to all the Finovate team for inviting me to the event. While we were 2 bloggers on the list (with @BankerVision), I believe I was the only one physically present that day. And yes blogging is what I do on Tekfin.

The event:
35 demos, 7 minutes each, only demos, no powerpoint let’s just say Finovate is a packed day.
Overall, each company made it through their time with a relatively good presentation. For some of them, I wished they had more time, especially when they are not really feature based but propose a all new business to explore. In most cases, the question of the business model is not discussed at all (more so frustrating when the presenter is a startup and not a Big Co)

Maybe there could be slightly less companies and a selection of 5-10 best of show which would have to present another time?

Thanks also to Chris Skinner for “Ricky Gervais”ing his hosting role, and overall providing insightful and funny comments.

Its a PFM world in Europe
Was it too much? Or a sign of the importance of PFM for banks for the coming months and years? Nonetheless PFM dominated the presentations with no less than 8 different companies (on 35 though). Now, it should be reminded that:
Europe did not have a Mint. With its success story, media coverage and final sell to Intuit, Mint helped put the PFM in more minds than any competitors in the US
A limited number of banks proposes PFM so far in Europe, especially major banks (contrary to Bank of America for example)
So it is clear the PFM should be a key item in the list of innovation banks want to push in the near future.

One of the common themes was, for providers going the white label way, the development of a specific back hand for banks to manage their communication campaigns. Most of the time it includes some kind of filter (income, existing products, socio-economic data) to allow for targeting. Also included is a tracking dashboard to provide the kind of feedback an internet based campaign has (click through rate, etc.)

Now for the specific things that caught my mind

Better UX: while PFM is already a major improvement over web-banking, some of the companies presenting had neat tricks, mainly Figlo, with an interesting approach toward financial planning using a timeline for income and needs, and goal cards to drag and drop on top: simple and elegant.

Better recommendations. Meniga, the icelandic PFM (and also voted among the best of shows) had an interesting approach to social comparison using gaming and personal grading (in a somewhat frank format (“You spend too much!”, not the positive reinforcement expected in the US, but refreshing). Now Meniga is used by 6% of the population of Iceland, and its aggregation platform is powered by a common scheme set in place by Icelandic banks (Edit: that is a misunderstanding from my side, Meniga does its own aggregation), so the social comparison is somewhat more relevant. I am not sure how replicable this would be in other countries.

The question of aggregation. Companies like Linxo from France were quite open in mentioning that they had built their own aggregation engine (they are the first PFM of this kind in France), other like Yodlee (with a disappointing presentation, I think) were presenting upload of CSV or pdf documents (“for the ones afraid of scrapping”). Most did not mention how they were getting their data. Its seems that until there is a major shift in how bank allow the diffusion of their customers data (or customers push for having full control of their data), it will remain a limitation in the true development of PFM.

The rant
There is something that I find wrong with all these talks around PFM. The way I see this market (and that’s my personal view to be debated) there are 2 distinctive offers:

Real Web Banking: “PFM”, when integrated in the banking platform, is what web banking should be. The only thing it lacks are transfers and there are no reason they should not be integrated. The existing template for web banking, dating back to the paper statement and before that the T account should disappear. Now banks want to be able to see an aggregate view of their clients assets, across their competitors, and there is an incentive for them in targeted market and customer knowledge, however the value added for the customer need to be proven. Bank might not see clearly the current business case for PFM, but I believe it is mainly that most of them are still struggling with how online acquisition can replace the role of the branch. PFM offers that opportunity, but it will only succeed in aggregation with better product opening online.

Independent advisors: that’s what providers such as Linxo or Mint are/should be aiming at. By aggregating the financial data of client across banks and providers, they are in the unique position of providing “independent” recommendations and services. They are positioned more like a virtual personal accountant. The integration of Turbo Tax with Mint is a good example in that direction. The difficulties that independent players have had in this field may have limited the growth of independent PFMs but I believe there is a strong opportunity in creating intelligent layers on top of banks. Independent PFMs are the first layer to exist as such and should push toward providing more services. Why not integrate web payments and transfers via Paypal, with a system equivalent to tripit for forwarding bills from the mail box?

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  • Great article and I can’t agree any more with your views on the necessity of making PFM central.

    I do have an observation however. You said “Now Meniga is used by 6% of the population of Iceland, and its aggregation platform is powered by a common scheme set in place by Icelandic banks, so the social comparison is somewhat more relevant. I am not sure how replicable this would be in other countries.” —- and that is not correct. There is no common scheme and it’s not set up by the Icelandic banks. Meniga’s PFM solution has its own aggregation and can, of course, work with third party aggregators as well. In addition to that, the model is utterly international with the social curiosity engine for community comparison demo-ed at Finovate needing no more than a few thousand users to start yielding meaningful results in any market, hence working for any reasonably sized retail bank in any country.

  • I agree with your rant Duena. PFM without aggregation is fairly useless. Even with aggregation, view-only PFM is hamstrung to the point of providing marginal benefit. What consumers want is bank-provided PFM with aggregation, transfers, bill-pay, and new product ordering capabilities.

  • 6% of the population of Iceland= 317600 * 6/100 = 19056

    even if it’s still better than zero, 6% of Iceland population is not something big

  • for the rest of the article, must agree that PFM is divided between Online banking 2.0 and Third Party PFM with multi account aggregation where you can build some layers upon it

  • Anonymous

    Thank you for your comment. I corrected the paragraph. Now maybe i misunderstood, but does Meniga uses screen scrapping for the aggregation of other Icelandic Financial Institutions? Or is it another scheme?
    Now I understand you may not need a lot of people to have the engine running (I agree a well sized retail bank would provide insights) however I still believe you have better results when you can extrapolate on 6% of a population, with a relatively uniform base of behaviours (type of shops available, etc..). Mint is not even close to have such a coverage, and it would need to take state specificities into account (local brands etc.).

  • Yann,

    I think there were quite a few bloggers there. Including myself and that Gervais-like fellow on the stage 🙂


  • Anonymous

    Thank you for commenting. I would not entirely agree on “what provider want is bank-provided PFM..” That’s a specific offer, there are valuable alternatives in having external PFM providers.

    I would like to have more data point on how customer choose their aggregation bank when they have multiple relationships. Also an important question will be how banks can leverage clients data and answer the pivacy question. All in all for PFM, maybe for now the product is ahead of the behaviours and it will be interesting to see how both evolve.

  • Anonymous

    He he! The tag was rare though 😉

  • Anonymous

    Yes,but with an important part of Iceland population in Rekjavik, you have an important part of the population living with the same overall spending environment.

    I am not negative with Meniga, on the contrary, I think they have a great environment to try new things in recommendations and big data.

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  • Meniga uses a combination between direct integration, manual import and screen scrapping for account aggregation in Iceland.

    We have also been working with screen scrapping for several other European countries but for various reasons it isn’t necessarily feasible in every country.

  • In as far as the statistical point goes, while Mint and all other PFM solutions are far from having the same national coverage we do, I believe they could potentially achieve the same sort of data if they took the time and had the skill to create the Insights feature, as we saw in the famous 1936 Gallup birth episode, it’s not size that matters but correct randomization.

    Anyhow, I think you’re right we do have a unique position and can try many things, in addition to the ones you quote, some of these things will bring PFM -or maybe just our solution?- to the forefront of client engagement in the ways discussed in the industry today, because we truly believe we can take the bank where the client’s mind and interest really are.

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  • Piero09

    Great article. The big question is, who do you think will win? Stand alone PFM or Banks Offering PFM?
    Stand alone PFMs have the benefit of the “Independent” advices, but in order for these to convince banks to give client’s information is much more difficult. On the other hand bank’s integrated PFM solutions do not give the client the benefit of having all of their accounts (all banks together) in one place.