GlobalData Plc

Simplicity is the key to PFM solutions

With the national savings ratio reaching an all-time low, savings, or the lack thereof, are back in the spotlight. Our data shows that UK consumers prefer simple solutions when it comes to personal financial management.

In the first quarter of 2017 the national savings rate fell to a record low of 1.7%. The Office for National Statistics claims that a combination of higher tax payments, stagnant wage growth, and higher inflation accounts for most of the decline. However, the decrease in the national savings ratio has been a long-running trend, falling from a high of 11.8% in Q1 2010.

Arguably the squeeze on disposable income makes personal financial management all the more important, yet with the many saving solutions on the market already, which ones do UK consumers value the most?

Two age groups that have been cutting current spending to save more, ever since GlobalData’s UK Consumer Sentiment Tracker started in January 2015, are 25–34 year olds and 45–54 year olds. In our 2017 Retail Banking Insight Survey we asked both groups what they thought about a range of PFM tools currently on the market.

Our survey showed that while 25–34 year olds overall had a greater appetite for PFM solutions, both groups found account aggregation, notifications when you have insufficient funds to pay for upcoming bills, and real-time balance alerts most useful.

The solutions that have the least impact are peer comparison tools, personalized recommendations, and prompts to help you save more of your money. Interestingly, peer comparison tools and personalized recommendations are the features that would likely require the most data collection, analysis, and insight on behalf of the provider.

One inference that could be made from the above data is that the more complicated or sophisticated tools may require consumers to adjust their behavior for little or no gain. Our survey shows that solutions that require less, if any, adjustment but simply make the existing tasks of balance monitoring, forecasting, and logging in to multiple accounts easier are more popular.

Providers would do better to focus their efforts on PFM tools that help with the simple, straightforward tasks, rather than trying to offer customers more advanced features and new insight through personalized recommendations, peer comparison tools, or graphs.

By Sean Harrison, Retail Banking Analyst

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