- The personal finance industry is inundated with cutting edge technology and digital startups.
- We have outlined some of the recent trends and projections for this rapidly changing market.
- Insider Intelligence launches Financial Services to help subscribers stay ahead of the technologies that are transforming the full spectrum of finance, including fintech, banking and payments. Click here to find out more.
Creating a long-term budget plan and managing investments has never been easier. With digital-only banks and financial startups increasingly offering the latest
(PFM) on their mobile apps and services, consumers can monitor their financial health with the push of a button.
And as the PFM industry becomes increasingly saturated with these digital competitors, incumbents are forced to improve their own suite of personal finance tools.
What is personal finance management (PFM) software?
PFM software, often applications, allows users to better manage their finances. Today’s PFM services can give users more control over their finances through artificial intelligence (AI), smart analytics, automation and open banking. The overall goal of PFM software is to help consumers improve their financial health.
Insider Intelligence does not include features such as money transfers or bill payments in its definition of PFM software because these actions do not directly contribute to improving financial literacy.
Major contributors to the GFP software space include:
Neobanks: Chime, N26 and Revolut are some of the best neobanks offering personal finance tools integrated directly into their mobile apps and websites. And with 40% of RFi survey respondents indicating that they find PFM solutions offered by non-bank entities to be more useful than those offered by their bank, these digital vendors are expected to gain traction in the PFM industry.
- Digital wealth managers: Otherwise known as robo-advisors, digital wealth managers use technologies like AI algorithms and machine learning to help consumers better understand their financial health and manage their investment decisions. Digital wealth managers can use a hybrid model, which means they integrate human advice with robo-advisor responses to improve customer relationships. Some of the main competitors in the field of digital wealth management are: Personal Capital, Nutmeg and Lending Club.
- White label software providers: White-label banking allows financial companies, typically legacy banks, to integrate third-party PFM software directly into their platforms, so customers can fine-tune the way they manage their finances. Meniga and Strands are two white-label PFM software providers that Insider Intelligence discusses in its Personal Finance Management Distributor report.
What is the market size of the PFM industry?
The US personal finance software market size is expected to reach $ 343 million by 2026, registering a compound annual growth rate (CAGR) of 5% from 2019 to 2026, per Market insider.
According to Insider Intelligence, only 17% of consumers now use Excel sheets to manage their money, compared to 53% using the mobile app offered by their bank.
And PFM solutions are especially appealing to young consumers who may not have a good grasp of the basics of personal finance. Seventy percent of millennials have no personal relationship with a banker, and 78% never visit a branch if they can help. What’s more, up to 53% of American millennials don’t spend time managing their finances – leaving the door open for PFM providers to unlock a huge opportunity if they can entice “unengaged” consumers.
Latest trends in the PFM industry
According to the Personal Finance Management Distributors report, customers of banks who use personal finance management tools are on average 18% wealthier than those who do not. And this competitive industry has led to an incredibly diverse market.
With startups and digital vendors delivering personalized customer experiences, consumers are demanding more of these advanced PFM features, forcing banks to add them to their services. As a result, people looking to better manage their finances have a variety of options to choose from, from traditional banking applications to
, stand-alone PFM applications.
One of the most appealing aspects of many PFM features is their 24/7 accessibility. Therefore, incumbents looking to stay competitive must invest in technology – whether it’s replacing existing IT systems or adopting a third-party solution – to ensure continuity of service.
A big opportunity for PFM services lies in the younger, digital-native cohorts. Over seventy percent of Gen Z believe brands should “help them achieve their personal goals and aspirations.” And improvements in user experience (UX), data sharing capabilities, and tools designed to hone its financial health have helped PFM solutions grab the attention of these young consumers.
The personal finance market is constantly evolving due to advancements in digital tools and technology, like AI and machine learning. Business Insider Intelligence Disruptors of personal finance management The report presents some best practices for banks looking to upgrade their PFM offerings and details the reasons why banks should reinvest in PFM.
Insider Intelligence is launching Financial Services, which will include a host of research reports, charts, forecasts and analysis that combine the renowned methodology of eMarketer with the agility and expertise of Business Insider Intelligence in financial services.