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Why some CUs prefer to keep PFM in-house

Some credit unions see benefits in having control over the personal finance management tools they offer.

PFM products have a reputation for not being user friendly. These tools typically force customers to wade through dashboards and charts to figure out what it is they should do with their finances.

But direct-to-consumer apps like Mint and Acorns have created a better user experience through their simplicity. For example, Mint was one of the first to provide aggregated accounts, which allows customers to see all of their bank accounts in one place.

Now these PFM tools from banking providers are catching up, allowing small financial institutions like credit unions to white label solutions instead of sending customers to another brand and without having to build something in-house.

“PFM is a longer range strategic play rather than a plug-in-play to stay competitive,” said Emmett Higdon, director of mobile for Javelin Strategy & Research. “It’s suffered from low usage because up until now it’s required too much effort on behalf of the user.”

Banking service providers are now offering their own aggregated accounts options in their PFM tools. This function has become especially useful to smaller institutions that want to give consumers a holistic view of their accounts and also offer them better deals on products they may be using elsewhere.

Both the $5.2 billion-asset Ent Credit Union in Colorado Springs, Colo., and the $18 billion-asset BECU in Tukwila, Wash., began using a PFM tool offered by MX, a data aggregator and data analytics provider, because of the ability to offer members aggregated accounts. For both credit unions, the aggregated accounts are what members see when they first open the app.

Members may also create their own budgets through the app MX's offers. The budget is developed from an analysis of three months of transaction data, and users can edit the budget after it's been created.

The $10.6 billion-asset Alliant Credit Union in Chicago uses a tool it bought from Geezeo, a fintech company that specializes in providing PFM products to credit unions and banks.

Both Geezeo and MX's tools categorize spending. Geezeo also prepares budgets and projects cash flow for members as well as sets and tracks financial goals.

With screen scraping being the prevailing method of data aggregation, Dave Mooney, president and CEO of Alliant, believes that his credit union will be more effective at protecting members’ data than the aggregators powering direct-to-consumer apps might be.

As a credit union with few branches, Alliant prides itself in offering an end-to-end digital experience for customers and prefers to have its own interfaces interacting with customers as opposed to having members go to another service, such as Mint or Acorns.

However, Mooney didn’t feel the need to build something from the ground up internally either. He thinks that smaller institutions should especially consider what they need and don’t need to own.

"We feel strongly about controlling and owning the user interface. It’s so critical to the user experience,” Mooney said. “We feel less strongly about what’s under the app or the site or about what’s under the sheets in the back office.”

Members at Ent get to see the credit union’s PFM tool on the mobile app as well as through their online account. Currently, its PFM tool gives users features where they can set goals on saving or paying off debt.

“The future of this product is come to a one stop shop to see your existing picture and receive bite-sized action pieces to help you improve your quality of life,” said Tanan Miles, vice president of electronic banking at Ent. That happens “in as few clicks as possible and with feedback and encouragement that you’re taking the right steps.”

BECU is working with MX to develop a tool that incentivizes its members to save more. The credit union was already using MX to power its mobile app. It made sense for them to also use MX to lease their own PFM tool as opposed to going to another data aggregator to connect users with direct-to-consumer apps.

A PFM tool also encourages customers to interact more with their finances and credit union, said Mike Zell, vice president of digital at BECU. However, Zell wants BECU to offer financial health advice that is actually useful and personalized to the member as opposed to promotional messaging.

Members may be more likely to use a PFM tool if the credit union buys something that can be integrated into the mobile app and online account as opposed to finding a direct-to-consumer app, Higdon said.

“We do want to surface features that will allow you to have automated savings of say $5 a day,” Zell said. “But we also want to personalize that experience. To utilize that data to know where they are and serve up messaging that’s more relevant.”

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