After raising the wrath of some of its members who had grownused to a personalfinancial management tool, Unitus Community Credit Union madethe hard decision to go with another firm. 

The $915 million Unitus Community CU blocked access to a popular online personalfinance software service provider over possible security issues,said Laurie Kresl, vice president of planning and businessdevelopment for the Portland, Ore.-based creditunion. 

“We started looking into why our members wanted to share theirfinancial information [with the software service],” Kresl recalled.“So we thought since we are in the business of taking care of ourmembers' needs, it was up to us to offer them a PFM; one that wouldappear on our online banking site and provide them withsecurity.”

• 8 Tips on How to Market a Personal Financial ManagementSolution

Unitus is now looking to tap into the marketing potential of PFMto retain and gain new members.

PFM is a Web-based software application that enables members tomanage and monitor their cash, bank accounts, credit and debitcards, bills, loans, investments, savings through expense tracking,account alerts and budgeting. The tool automatically updates andcategorizes all expenses, allowing members to get timely updates onall of their finances on one site.

Although an estimated one in four financial institutions offerPFM, some industry analysts contend credit unions need to do abetter job at marketing the tool and to find ways to engage membersin their financial lives including improving features and functionsin order to draw more interest. The popularity of PFM emerged in2007 and 2008 when Mint.com, a personal financial management site,captured rave reviews from trade press reviewers and consumersalike. 

After reviewing proposals from numerous vendors, Unituspartnered with Geezeoof Tolland, Conn., a PFM vendor that serves 112 credit unions.Before launching its program in November 2010, the credit union didsomething unexpected. 

“We had a healthy debate about whether we should offer PFM forfree or charge for it,” Kresl explained. “Credit unions and bankswent down the path for a long time to give everything away forfree. In some ways, that devalues the product or service. A lot oforganizations, for example, found out people were signing up forfree bill pay service but they weren't using it.”

Knowing that charging a fee meant some members wouldn't sign upfor PFM, Unitus decided that doing so would attract engaged memberswho really wanted to frequent use of the tool. That turned out tobe the outcome. 

“These members who regularly use the PFM are highly profitablemembers,” Kresl said. “They are some of the most engaged members inthe credit union, and they advocate the credit union even morebecause they appreciate that we are offering the tools theywant.”

The monthly $2 fee covers the cost of the tool, according toUnitus. As of August, 1,300 members of the credit union's 34,191online users had signed up for Total Finance, Unitus' PFMsolution.  Nearly 40% of PFM users access the tool via asmartphone or tablet.

“We don't have the largest number of members using our PFM. Whatwe do have is that among Geezeo's clients, our members are the mostactive when it comes to using the PFM regularly,” saidKresl. 

Although the Unitus member adoption rate is only 3.8%, thecredit union is hoping to attract more members to by showcasing PFMon the home page and featuring brief videos illustrating how thetool works and its benefits. 

What's more, Kresl pointed out that PFM's ability to createpositive member experiences is a plus in retaining profitablemembers who are constantly being wooed by established and emergingcompetitors.  Some research supports thisclaim. 

Boston-based industry research firm Aite Group surveyed 976 PFMusers in January 2010. About 25% of all the respondents admittedthey are less likely to switch their banking or credit unionrelationship as a result of using PFM. Among consumers who used PFMon their bank or credit union's site, that percentage increased to30%.

Ron Shevlin, Aite Group senior analyst, said he believes PFM isand can be a valuable tool, but it has to do more than budgetingand expense categorization. 

“What people are really interested in is getting help withmanaging their day-to-day expenses,” said Shevlin. “What they wantis where can they get better deals, how do other people spend theirmoney, how are they doing managing their finances compared toeveryone else.”

There is not a lot of well integrated financial education withPFM, Shevlin explained. 

“There is also very little advice on which payment methods touse, how to spend less, where to spend less, how to get betterdeals,” Shevlin said. “Daily deals are a big topic, merchant dealsbased on consumer spending are big, but so little of that seems tobe integrated with this concept of personal financialmanagement.” 

Those issues aside, some credit unions have had varying degreesof success in marketing PFM solutions. According to Geezeo, theapproximate average member adoption rates among the 112 creditunions it serves ranges from 8% to 20%.  

For instance, the $568 million Newport News, Va.-based FirstAdvantage Credit Union's PFM adoption rate is more than 14% among30,000 online users, and the $340 million Call Federal Credit Unionin Richmond, Va., has signed up 13.6% of its 6,900 online users,according to Geezeo. First Advantage and Call Federal serve 57,111and 28,705 members, respectively. 

“We have others that have done substantially better than that,and we have others that have done not quite as well,” said BryanClagett, Geezeo chief marketing officer.

Because consumers say they want a PFM solution from their bankor credit union not an independent PFM provider, Clagett said hebelieves adoption rates will increase over time.

Clagett cited research from a Javelin Research and StrategyAugust 2011 study that showed banks and credit unions enjoyed onecritical advantage over consumer PFM portals: trust. By more thana two to one margin, consumers said they considered banksand credit unions to be safer than PFM websitesfor safeguarding login credentials that are used toaggregate account information from multiple financialinstitutions. 

Nonetheless, it appears that credit unions and banks have notdone a good enough job in marketing PFM, in part, because only 4%of American consumers regularly use the tool, according toPleasanton, Calif.-based Javelin.

Credit union executives should view PFMs more broadly, not as aspecialty item or menu tab on a website that will appeal to only asmall slice of members, said Mark Schwanhausser, seniormultichannel financial services analyst for Javelin. 

According to an August 2011 survey Javelin conducted with 2,300consumers, most of them embraced the concept of a PFM site as longas it included features that would allow them to aggregate allfinancial accounts, make bill payments, do money transfers, setcustomized alerts, and automatically break downexpenditures. 

Schwanhausser said it might benefit credit unions to craftcontextual marketing messages that show PFM's benefits includingsaving time and improving finances, which aligns with the creditunion industry's mission of people helping people. 

Still, there's another obstacle. According to Aite's research,half of consumers don't look to their primary financialinstitutions to manage their finances. 

“However, 30% of consumers said they rarely look to theirfinancial institution to manage their finances, but they also saidmaybe they should, so perhaps there is a sliver of hope,” Shevlinsaid, adding this is where credit unions and banks need to dobetter at shifting the perception that members and customers wanthelp to manage their financial lives. 

Another hopeful trend is that some industry watchers expect thepercentage of members who are using PFM to increase from about 8%to 10% this year to 15% in 2013. There may be some interestingdiscrepancies that lie beneath those numbers.

“When we ask credit union executives if their members are usingPFM, they say 'no,'” said Shevlin. “When you ask customers if theyare using PFM they say 'yes.'” 

Incidentally, Aite's research showed about 20% to 25% ofconsumers said they used some type of PFM. Fifteen percent of thoseconsumers used a PFM tool on their bank or credit unionwebsite.

Some have told Shevlin that when PFM is launched, it's notunusual that 20% to 40% of online members sign up to use it butover the next two to three months, usage drops off. 

“That doesn't surprise me,” he said. “It's the New Year'sresolution effect.” 

8 Tips on How to Market a Personal Financial ManagementSolution

• Highlight the benefits. It saves time, saves money,and reduces debt within contextual ads that show how a PFM canimprove the financial lives for members. 

• Run ads throughout the year when consumers spendmoney including on holidays, New Year's, summer vacation and backto school. This may show how PFM can help them manage their moneyin smarter ways. 

• Provide PFM training for credit union employees andencourage them to use the tool so they can better articulate thebenefits to members and prospects.  

• Integrate your PFM with your credit union's onlineservices.

• Promote PFM on the credit union's home page, and onother appropriate sites.

• Encourage new members to try PFM when they open anaccount.

• Offer PFM as an add-on product when marketing otherproducts to members.

• During financial education and advocacy seminars,feature the PFM tool to demonstrate how it can be used toaccomplish money goals.

Source:Geezeo and PTP New Media