Giving Away iPads Doesn't Solve PFM Challenges

In about 20 words, NetBanker takes a machete to PFM, cutting it down with three swipes:

  1. It’s hard to get started
  2. It’s a pain to keep up
  3. It’s disconcerting to view spending summaries

But, as NetBanker notes — and I agree with both the swipes and the rebuttal — there are “obvious benefits” to PFM use.

NetBanker goes on to say that “one way to tackle the first problem is to offer a sweepstakes or bonus to induce trial,” and highlights Truliant Federal Credit Union’s attempt to do just that by giving away iPads to members who sign up for using PFM.

My take: Truliant is wasting its money.

If you need to lose weight, you can: 1) Read up on which foods to eat; 2) Eat those foods; and 3) Exercise more. Doing only #1 — reading up on which foods to eat — will do little good in actually reducing your weight. Step #1, without #2 and #3, is a failed strategy.

This is analogous to what Truliant is doing: Trying to solve the three-pronged PFM problem by addressing just the first prong. 

PFM is the new New Year’s resolution. It used to be that when the new year came around, we resolved to lose weight and/or stop smoking. Now we resolve to get our financial lives in order. And just as we used to join a gym to realize our weight loss resolution, we sign up for a PFM to to realize our financial resolution. 

When March rolls around, we’re not going to the gym as often, and not long after we start using a PFM tool, our enthusiasm and commitment wanes, and we stop using it. 

Realizing the “obvious benefits” of PFM requires committed use of the tool over some period of time. Simply incenting people to sign up for using the tool does absolutely nothing to encourage or ensure continued use. 

In fact, if you read the fine print of Truliant’s contest, members don’t actually have to enroll in PFM to participate. (I’m tempted to enter the contest to see if they even really limit it to members). 

My prediction: A large percentage of Truliant’s online banking members will enter the contest and sign up for PFM. Truliant will then boast about their high PFM enrollment numbers. And then we’ll never hear again whether or not those members continued to use the tool and reaped the benefits. 

What should Truliant do?

Think Foursquare for PFM. 

Despite what a lot of people think, Foursquare isn’t about location awareness or the mobile channel. It’s about gamification. It’s about earning badges and becoming mayor. And if there are rewards for doing those things, great.

People like to play games. We like friendly competition, and we like to turn routine things into games to spice them up, and make them more interesting.

And that’s what banks and credit unions need to do with PFM — make a game out of it. Points for setting up a budget, points for categorizing your spending, even more points for keeping to your budget. Points for sharing tips and tricks regarding the management of one’s financial life with other PFM users.  And giving away iPads to the people who amass the most points.

In other words, incenting customers and members to deal with the “pain of keeping up” with the use of PFM.

If you can address challenge #2, challenge #1 takes care of itself. 

As for the disconcerting nature of seeing your spending patterns, I can’t help you. I’m a consultant — not a miracle worker.


10 thoughts on “Giving Away iPads Doesn't Solve PFM Challenges

  1. Ron, you ignorant sloth. I am shocked that you were not aware that there are absolutely no problems in the credit union world that cannot be solved by giving away an ipad. Now before you answe my post I just want you to remember that I have Bill Gates on my side as well as Apple, which I will remind you is the highest valued American company. Choose your words carefully or we will turn you over to Standard and Poors for a revaluation.

  2. In case you are wondering, Bill Gates is on my side because he knows that consumer electronics can solve any problem. Sorry I forgot to explain. No matter, you are in hot “tech” water over this and I am going to see that your feet are held to the high tech fire.

  3. Paul: I will say this: At least Truliant is giving away an iPAD and not an iPOD Shuffle.

    Here’s the other thing that every firm — not just credit unions — needs to remember: If you measure your success by how many people respond to a contest in which you give something away, then you are a complete and utter idiot.

    (Which is worse than being an ignorant sloth)

  4. It seems that the logical evolution of PFM is that it would be automated and integrated into checking accounts vs. something you have to sign up for. Consumers should just be able to login to online banking and click on a tab for detailed reports and analysis — no manual labor involved. Aren’t all card-based transactions coded by type of retailer? If so, it should be easy for a bank to breakdown customers’ spending habits across basic categories.

    Does any PFM provider have a mobile service that asks users to categorize each purchase as they are made? For example, a message pops up on a user’s iPhone saying something like, “You just spent $38.24 at Texaco. Would you like to classify this purchase under gas/auto? Or [other]?”

  5. JP: Totally agree on the first point re: the integration of PFM. However, regarding the automated coding, card-based transactions are coded by merchant, but most people need a lot more granular level of coding than what comes in. Most PFM tools make some attempt at automated coding, but there’s still some manual effort involved to get it right.

  6. “Points for setting up a budget, points for categorizing your spending, even more points for keeping to your budget.” Mint did exactly that a couple years ago. Nobody used it.

  7. A good point, actually as I remember I started following your posts when you gave away an ipod shuffle. In your defense the ipad had not yet been invented. Numbers I have seen say that PFM has hit a wall, it is not growing. This reminds me of years ago when we debated if account aggregation would ever take off. One minute is was, the next it was not. This stuff just isn’t all that consumer friendly. Maybe someone will figure that out. In the mean time folks like Truliant are paying for the PFM feature and a bunch of ipads.

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