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Allocating Assets: Enhancing Consumer Control through Personal Financial Management Tools

Sabrina Tharani |

The need for control seems to be driving news recently: Insights has explored the search for safety in the Bitcoin phenomenon and in eCommerce concerns. With U.S. consumer sentiment numbers at a nine-month low last month, it is no surprise that consumers are looking to regain a sense of power over both their spending strategies and personal finances. For banks and financial institutions, this trend has some very specific implications.

It seems that consumers are looking for control but unsure of how to get it.

Just one in five U.S. consumers is highly active in the management of his financial life: according to recent MasterCard research, banking applications, including online personal financial management (PFM) tools are used by just 31 percent of Americans.

But, in foregoing use of the tools technology has to offer, consumers have discovered the value of hedging. Consumers, more likely to switch banks as a result of dissatisfaction with customer service or increased banking fees, are intensifying their search for the best rates, products and services. Globally, those with just one banking relationship have fallen from 41 percent to 31 percent since 2011, and those with three or more banks have increased from 21 percent to 32 percent in the same period. When shopping for a bank, consumers are looking for easily navigable online banking portals, the best interest rates, multiple account features and availability of promotions or offers.

Helping consumers regain control of their finances through personal finance tools may make them more profitable customers, as higher levels of consumer engagement with financial management activities correlate tightly with the strength of their banking relationship, referral behavior and future purchase intention. Directly providing the personal financial management tools, applications and educational resources to consumers will help banks militate against scattered assets and presents opportunity to connect with their customers.

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Topics: Payments Strategy

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