Online Personal Financial Management 3.0
Taking online banking to the next level with personal financial management tools and guidance (note 1).

It’s been almost four years since our last full report on online financial management (OFM). At that time (summer 2006), there was no Mint, no My Portfolio from Bank of America, and few offerings from major fintech vendors.

Yodlee was the only major player with a true OFM product, one that by year-end 2006 would be on the map in a serious way as the machinery behind BofA’s new offering (2006 post).

Back then, users that wanted financial management features still relied on desktop software, primarily Intuit’s Quicken and Microsoft Money.

The market has changed dramatically since then:

• Microsoft discontinued its desktop PFM altogether in 2009.
• Mint launched in 2007, quickly picked up a million users, and was acquired by Intuit for $170 million in late 2009.
• Intuit put Quicken online, then discontinued it, in favor of its new Mint.com brand.
• Intuit purchased Digital Insight and is now providing Quicken-like functions to more than 200 banks and credit unions.
• More than two dozen online personal finance companies have launched. And other than Mint, most have struggled to gain users. Many of the startups are now pursuing distribution deals through banks and credit unions.  

That’s a lot of change in less than four years. But it’s nothing compared to what will happen in the next four. In the report, we look at the increased role OFM features will play in future online and mobile offerings from financial institutions, specifically:  

• The key tenets of online money management, and why less is more for many banking customers
• How to mix and match features to develop the ultimate OFM package
• How the mobile channel fits in to the mix
• OFM website traffic (U.S.) for the past three years
• Current number of OFM users and a 10-year forecast
• The unique user experience of PNC Bank’s Virtual Wallet (see previous post)
• Why banks and credit unions have the upper hand in the battle for OFM users, but the rise of social networks creates interesting opportunities

Future file: The rise of the Virtual Credit Union?
In all our reports, we try to shed light on what’s around the corner. From where we sit today, it seems likely that most money-management activity will take place through online/mobile channels at traditional financial institutions. But we also consider an alternate future where the social networks rise up to become powerful brokers of financial services (think Facebook Credits) and become what we call “virtual credit unions.”

While it’s too soon to predict whether the social networked-fueled virtual credit union takes root — regulatory issues are a huge wildcard — there’s no doubt the social networks will have a dramatic impact on payments and financial services consumption.  

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Notes:
1. The latest report is available at no extra charge to OBR subscribers here; and can be purchased for US$495 by others here. See the Table of Contents here (PDF). 
2. In this report, we use OFM as the acronym for online financial management. But these features are also referred to as PFM (personal financial management) in many sources including previous OBR and Netbanker articles.