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PerSonal fInancIal management

von der PrIvaten und SIcheren aggregatIon der fInanZdaten Zur verwaltung der PerSönlIchen fInanZen

from PrIvate and Secure fInancIal data aggregatIon to PerSonal fInancIal management

David Hamilton, CEO at eWise

Personalisierte Finanzverwaltung (PFM) bietet Bankkunden einen besseren Einblick in ihre eigene Finanztätigkeit. Eine PFM-Lösung ermöglicht es ihnen, ihr Budget und ihre finan-ziellen Ziele zu verwalten, vorauszuberechnen, deren Ent-wicklung zu verfolgen und benachrichtigt zu werden, wenn etwas mit ihren Finanzen in Wechselwirkung tritt, so dass sie schnell reagieren und gegebenenfalls eine Anpassung vornehmen können. Die Echtzeit-Erfahrung mit diesem digi-talen Werkzeug verstärkt das Engagement und die Loyalität gegenüber der Bank, die den Dienst zur Verfügung stellt.

Personal Financial Management: a digital tool for retail banks to enhance customers’ loyalty and engagementPersonal Financial Management (PFM) provides bank-ing consumers with greater insight into their financial lives. PFM allows them to manage, forecast and track their budgets and financial goals, and be notified when something happens with their finances in order for them to react quickly and adjust if needed. The real-time ex-perience of this digital tool reinforces engagement and loyalty towards the bank providing the service.

Die PFM-Tools bieten mehrere wichtige Funktionen, wie die automatische Kategorisierung von Transaktionen, Analyse der Ausgaben, Cash-Flow-Prognose, Budgetierung, Zielset-zung, Warnungen und Benachrichtigungen. Da alles zusam-mengefasst ist, sind die persönlichen Finanzen einfacher zu verwalten und zu optimieren.

In der Vergangenheit wurden die PFM-Tools von Finanzinsti-tuten eingesetzt, um ihren Kunden einen besseren Überblick über ihre Finanzen zu bieten, basierten aber nur auf den Konten in ihrer Institution. Die 360° Übersicht geht einen Schritt weiter mit der Schaffung einer sicheren und privaten Aggregation aller externen Konten. Durch die Einbeziehung der von anderen Institutionen verwalteten Konten erhält der Kunde ein vollständigeres und umfassenderes Bild seiner Fi-nanzen.

Es gibt zwei grundlegende Arten von Konten-Aggregation: einmal die «Server-Side», wo Konto und Informationen in einem Server gruppiert sind und von einem Drittanbieter betreut werden. Zum Anderen die «Client-Side», wo Kunden-

PFM tools provide several key features such as automated transaction categorisation, spend analysis, cash flow fore-casting, budgeting, goal setting, alerts and notifications, together, which make it easier to manage and optimise personal finances.

Categorisation – Transform transaction data into mean-ingful information

Highly optimised algorithms automatically categorise trans-action activity, incorporating the customer past preferences and behaviours in order to increase categorisation accuracy.

Spend analysis – Show customers where their money goes

PFM also provide superior spend analysis tools to visualise trends and allow customers to explore their spending, help-ing them to find opportunities to better manage their money and reach their goals. All spending is tracked and summed up by category to help customers see how much they have spent in Home, Lifestyle, Food, Shopping, Car and more.







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konten und Informationen auf dem vom Kunden gewählten Gerät zusammengefasst sind (Handy, Tablet oder PC). Im Modell «Client-Side», wird der Service-Provider niemals die Informationen für die Online-Identifikationen verwahren.

Es gibt eine Reihe von entscheidenden Vorteilen für Kunden und Banken.

Die drei großen Hauptvorteile sind:• Erhöhte Kundenbindung• Erhöhte Produktdurchdringung bei Bestandskunden• Erhöhtes digitales Engagement.

Die Anregung zur Nutzung digitaler Management-Systeme zum Erreichen bestimmter Ziele und der Verbesserung des Finanzmanagements, kann die Kosten in anderen Kanälen senken.

Durch die PFMs wird der Ansatz zur Finanzverwaltung und zu neuen Erkenntnissen praktischer und schafft mehr Ver-trauen. Darüber hinaus befähigt der intelligente Ansatz zur Verbesserung aller Dienstleistungen der Bank.

Intelligent cash flow forecasting – Allow customers to see into the future

The smart spending and income prediction feature uses the customers past behaviour and scheduled payments provid-ing them with actionable insight into their future cash flow needs. They can visualise how their finances look like in the coming months according to past financial transactions.

Sleek budgeting tools – Help customers become better money managers

Customers can create budgets based on historical transac-tions and compare actual spending and income against their financial plans, to help ensure that they remain on track.

Inspiring them to save for the future – Reach their sav-ings and investment goals

Users can establish saving goals, no matter how big or small. Visual prompts and alerts keep them up-to-date on progress and motivated to achieve their goals.

Keep in touch with real-time personal financial alerts

The comprehensive alert and notification capability advises customers on all aspects of their finances. They will instantly know when a budget is reached, a saving goal achieved.

Creating a comprehensive 360° View

In the past, PFM tools have been implemented by financial institutions to offer their customers with more insight into their finances based on just the accounts held with their institution. However, we are seeing a shift toward creating a more comprehensive 360° view by aggregating external accounts in a secure and private way. By incorporating ac-counts held with other institutions, the customer gets a more comprehensive and more complete picture of their finances.

Integrating Account Aggregation to enhance the value proposition of Personal Financial Management tools to banking customersTo ensure value from the digital Money Management, it must cover the entire financial landscape of the consumer. Account Aggregation, which securely aggregates all of the customers’ internal and external-held accounts into a single dashboard, allows PFM features to be used over the consolidated data, providing a complete picture back to the customer. With the power of real-time account and transac-tion data, consolidating all of the customer’s accounts in a

David Hamilton







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one-stop-application makes life easier and their spending more controllable. It is no wonder that many people have difficulties managing their finances given the high number of financial relationships an individual has: credit cards, savings accounts, current accounts, investments accounts, brokerage accounts, insurance policies, pension plans.

Data privacy and security are keyBanks clearly understand the customers’ demand for sim-plicity, aggregating all of their financial accounts in one place and delivering easy-to-use digital Money Manage-ment tools. So in a world where personal data security is increasingly under threat, how do financial institutions of-fer their customers comprehensive Account Aggregation and Personal Financial Management tools without becom-ing the custodian of customer data and therefore a larger target for hackers and increasing the risk of data loss?

The answer to their concerns is to understand the ar-chitecture of data aggregation models and opt for a cli-ent-side aggregation model, where all the data remains private to the customer.

While on the surface, most Account Aggregation solutions look the same, lurking below are substantial differences in how data is accessed and aggregated for the customer.

In broad terms there are two types of Account Aggrega-tion; “Server-Side” where customer accounts and infor-mation is aggregated by a server owned and managed by a third-party service provider, and “Client-Side” where customer accounts and information is aggregated on the customers chosen device (their mobile, tablet or PC).

In a “Server-Side” model, customers, having accepted Terms & Conditions that provide “Power of attorney” to the service provider, disclose their online credentials to the service provider. These credentials are stored on the server and are used by the provider to perform aggrega-tion. Aggregated data is also stored on the server for pro-cessing and ultimately access by the customer. The inher-ent risks associated with disclosure of online credentials to a third-party and the swelling amount of personal finan-cial information stored by the provider, even if encrypted, are obvious and significant downsides to this approach.

Conversely, the “Client-Side” model, invented and pat-ented by eWise in 2000, never requires the customer to disclose their online credentials to a third-party and all aggregation is performed on the customer’s chosen de-vice. All data and information is encrypted and stored on the customer’s device in a Personal Data Vault, where the

customer can choose to share their data with the service provider or any third-party through permission manage-ment (privacy controls). In line with security best practice, encryption keys are not stored on the device but rather on “zero-knowledge” servers.

In the client-side model, a financial services firm or Ac-count Aggregation service provider never becomes the custodian of the customer’s online credentials. Through permissions granted by the customer, information they hold with external financial services providers maybe shared with the service provider from the Personal Data Vault. This approach not only offers customers greater control and choice over the personal data, it eliminates the compliance, legal and security risks of online creden-tial custody for the service provider.

Personal data sharing through explicit customer’s per-mission is the only way to keep their trust

An effect of implicit credential sharing through the serv-er-side aggregation model means that the service provider has access to user’s financial data and can then anonymise and sell that data. In a quest for better opportunities to cross-sell and increase revenue, sensitive and personal data has become paramount. There is a very high demand from companies and financial institutions to acquire personal data. But taking care of user’s privacy also takes care of the bank’s objective. The goal of getting more insights in order to achieve better cross-selling opportunities could be achieved in a private and secure way that is mutually beneficial. With client-side aggregation, customers take control over their data and benefit from choosing who they want to share their data with through a granular permission management dash-board. Customers get control back over their personal data and the bank is positioned as a trusted partner.

Benefits for banks implementing a Personal Financial Management solution and added value for customers

Successful PFM implementations involve a shift away from focus solely on internal products to increasing scope







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to cover external institution accounts and services in the financial picture they present to their customer. This cul-ture shift, the perceived compliance risks, and complexity of adjusting well established digital channels are causing financial institutions to be hesitant in adopting and com-mitting to these solutions.

Questions are being raised such as: What are the benefits of PFM? What is the Return on Investment? What is the added value for customers?

There are a significant number of benefits for both cus-tomers and banks. We can easily highlight three main key benefits: increased customer loyalty, increased product penetration per customer and increased digital engage-ment.

Loyalty is key in obtaining a long-term client base, with the implementation of PFM and increased engagement, clients are less likely to switch to other service providers. A European bank, client of eWise, reduced churn by 50% with the adaption of PFM. Thereafter, the bank achieved a 30% increase in balance among users through relevant cross-selling offers. It was also demonstrated by another customer that with the right execution and customer ex-

1 Western European weighted average = 0.31 visit per user / day – Cap Gemini & Efma , 2014 World Retail Banking Report

perience the bank achieved 1.01 e-banking visits per day, after the first month of launch, which is +225% more en-gagement than Western European weighted average of 0.31 e-banking visits per day1.

Enabling clients with tools to be financially savvy has re-sulted in an increase in loyalty and they become less likely to change providers. Businesses can benefit from the rich data collected and created from PFM solutions through insights gained from data shared by the user. Customers spending habits allows for a personalised approach to client relations, increasing cross-sell services tailored to their needs with direct revenue generation.

The encouragement of using digital money management tools to achieve goals and improve financial management can reduce costs in other channels.

Through Personal Financial Management a more hands-on-approach to financial management and insights not only gains trust, moreover, a smart approach that will im-prove the overall services provided by the implementer.

BSL Fintech special - English/german

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