Insights 11 October 2019

PFM, a Personal Financial and Investment Assistant in the Digital Age.

The next steps for banks in the digital era in managing money matters for customers and taking the role of a personal financial manager will be to bring their services closer to customers and away from their brick-and-mortar branches with the modern PFM coming into play as a key weapon.

Wouldn’t it be great to have a personal assistant right next to us at all times? That takes care of all our money affairs, not just in administration but also in planning investments to boost the cash in our wallet. Let’s imagine that when waking up and getting out of bed in the morning, we receive an alert from our personal financial manager, reporting our financial status compared to specific goals and how far we are from reaching such goals; and in the afternoon, we receive a message from our assistant, stating “It’s time to pay your monthly condo rent. Would you like your assistant to help make a payment?”

Then all we’d need to do is to click one button and we no longer have to be worried about going out to make a payment. Or, while we are working, our phone rings and we learn a bad news that we may need to use some money immediately as a back-up to support medical expenses of our family. So, we pick up the phone and our personal assistant recommends a proper loan that is suitable for us and also helps find best interest rates from different banks. What about if this assistant is a totally computer-based system without the support from a real human in any steps of the service? Does it sound to you like something in the far distant future?

A personal financial and investment assistant

Catalysts for changes in the image of how businesses, especially banks, provide services. 

Some people may think that the future where a robot answers chat messages or takes orders through a phone and helps organize things for a human is still far from reach. However, in reality, this story does not have to wait for the next generation to materialize. The coming of Artificial Intelligence (AI) technology to support Big Data will transform the way various services are provided.

The information on the operating results of AI application developers for organizations and the number of published academic papers relating to AI show the high growth of this technology over the past 5 years. One of the efforts of applying AI to service businesses is to develop AI to become a smart assistant for consumers as well as to provide services relating to personal financial management.

“Modern PFM”, a weapon for managing personal financial affairs.

Many banks around the world are turning their efforts into developing their own financial management systems to provide services for their clients. Such practice is considered a way to create relationships with digital-age customers with a focus on features to provide customers with multi-facet assistance.

  • Investment management service – Helping customers set investment goals and manage their investment through fully integrated solutions.
  • Debt management – Helping customers choose and access appropriate sources of funds that best suit their needs; and helping them keep track of their loan status through various channels as well as their overall financial position.
  • Financial status and cash flow monitoring – Helping customers monitor their financial status through different channels as well as the overview of their financial position.
  • Insurance management – Helping customers manage risks and choose the right insurance packages to meet their needs. 
  • Retirement planning – Helping customers set their goals after retirement and manage savings and investment funds.
  • Expense management – Helping customers manage expenses, set up budgets for different projects, and pay recurring monthly bills.

Moreover, efforts are being made to pave the way for infrastructures for further development of a “Virtual Assistant”. This is because banks around the world believe that in the future consumers can access financial products through a “Virtual Assistant” and consumer behaviors in conducting transactions will be very much different from now.

What would be the future form of PFM as compared to the present version? 

Actually, the Personal Financial Management (PFM) is not a totally brand new service. It is only that, in the past, banks transacted business with certain groups of customers and services were provided at physical branches. That is a kind of model where services could not reach a wider scale of customers. However, in the age of digitalization and advanced technology, consumer behaviors are changing and banks can use PFM to expand their scope of services. In earlier days, the “Digital PFM” service had not yet taken place due to constraints like people and technology.

In the near future, what is expected about PFM transformation after the integration of Big Data and AI technologies is the banks’ ability to truly understand each individual customer and establish a relationship that is based on a system, not a human. Normally, at a bank, once a person resigns from his or her job, the knowledge and understanding about a customer and the established good relationship between the bank and the customer would eventually fade away or end. Also, with technologies as a key player, services can be provided more quickly and there are no limits in terms of time and place, not like it used to be.

Three steps of making a successful “Modern PFM” 

There are 3 steps for banks to understand and gain deeper insights into customers’ preferences and needs through analysis of their behavior data collected from various channels. Once the banks are able to understand and know customers’ minds, they will have more chances to win customers’ hearts by offering different types of assistance to suit their true needs.With assistance offered at appropriate places and times, customers will love the experiences they have and will be willing to do more transactions via the banks they prefer further. Then, the banks will be able to gain more income from the customers. What all banks around the world should be doing to constantly improve their own PFM services can be divided into 3 steps as follows :

Knowing Customers

The challenge is that we have to collect more personal information and let the system learn patterns and preferences of customers through data analytics as well as start taking on a customer-centric perspective.What to do initially is to develop an infrastructure for collecting information on customers’ spending according to their lifestyles for analysis of their behaviors. Such customer information should be collected from various channels for storing and processing at a center.

Helping customer

The challenge is how we can create a system that gain insights into customer needs quickly and become their most preferred system. This system should also allow businesses to personalise services and suggestions to meet individual customer needs.

What to do initially is to offer new financial services in the “non-bank” section and adopt more customers, to be a good partner for customers by providing suggestions about their behaviours and decisions on money matters, and to design PFM in a way that makes it invisible and creates an omnichannel customer experience. 

Monetization of Customers’ User Experiences

The challenge is how to find new ways of making money from customers’ user experiences, to make customers feel a sense of engagement with banks’ services, and to identify new patterns of preferences and values from customers’ user data and behaviors.

What to do initially is to offer services that are specialised and personalised to meet individual customer needs and to join hands with selected business partners. That includes them as part of the Ecosystem so as to offer a wider range of services.


It can be seen that banks will be able to monetize customers only after they can win customers’ hearts. To achieve that, we will have to develop a system that goes beyond existing banking practices and gets closer to customers such that it can help customers deal with their daily live.

To create such a system, banks have to gain a deeper understanding of each customer through collecting various aspects of information and life goals. This task, however, poses some challenges. For example, we have to figure out how to obtain such information in terms of technology. That store such large amount of information. How customers and banks can mostly benefit from such information.

We may even have to think about redesigned work processes as platforms in the digital age. That can be expanded without the need for additional manpower. To win the competition, banks will have to break away from the old patterns and the outdated mindsets. Then, they should move closer to customers. The main aim of helping them to achieve their personal financial goals to the greatest extent possible.