Two factors are converging to drive improvements in PFM tool functions and make them a bigger factor in customer satisfaction and retention.

Open banking will let consumers assemble a complete, detailed view of their financial lives

Consumers want to see all of their financial data in one place. Seventy-five percent of US bank customers find it useful when their bank shows the balances of their external accounts, per a May 2024 J.D. Power survey. That share reached 88% for customers under 40 and 87% among those who felt they were overextended financially.

Currently, data sharing is piecemeal and incomplete. PFM apps are typically fed account data gathered through API connections, scraped from secure websites, or offered up by FIs in accordance with previously negotiated agreements. Data sharing is almost entirely defined by industry players, with FIs choosing whether they participate.

Regulations will make data sharing easier for consumers using PFM tools. This fall, the Consumer Financial Protection Bureau (CFPB) will finalize open banking rules requiring all FIs to adopt technology that lets apps access consumers’ financial data at their request. That includes information associated with credit cards, checking and savings accounts, prepaid cards, and digital wallets. This will make FIs custodians of consumer data, rather than owners, but they will remain responsible for data security, risk management, and consumer privacy.

Integrating AI and data into chatbots and virtual assistants will give PFM tools forward-looking capabilities

PFM analysis currently focuses on past transactions. For example, it can break down a user’s spending from the previous month into categories. But presenting users with this information still leaves them with the burden of deciding how to act on it.

PFM tools need to become central to users’ lives. If PFM functions are to change consumers’ behaviors and improve their financial health, they can’t be buried in a submenu or require extensive manual input and oversight. The tools need to take the initiative in interacting with the consumer and be more present in their daily routine.

GenAI interfaces will turn PFM tools into intelligent assistants. Communicating with genAI agents will involve less clicking and more chatting and messaging. It will be more akin to interactions with a digital assistant like Siri or Alexa—but users will also be able to delegate work for agents to complete. For example, a user could say: “Find me a certificate of deposit at a 5.30% rate with a minimum of $1,000 and open up an account for me.” The genAI agent would go out on the internet, do the work, and report back after completing the task.

Read the full report, Personal Finance Management Tools 2024.