Personal Finance Management (PFM) is the future of online banking

Personal Finance Management (PFM) is the future of online banking

Georg LudvikssonMeniga Co-Founder and CEO

“PFM’s critically important, it’s a vision of the future of online banking”

Emmett Higdon, Senior Analyst at Forrester Research

Venture-funded Nordic software company

Born from the Icelandic financial crisis

Focus on PFM Solutions for Retail Banks

Operating PFM with retail banks since 2009

What is PFM?

+• Overview• Budgeting• Financial Planning• Follow-up• Education

• Easy to use• Social networking• Rich Interface• Fun• Visual

Personal Finance Software Web 2.0

= Mass Appeal

The new generation of online PFM started in the USA

Mint.com launched in 2007and now has 4 million users

... but banks are slowly taking over

One in five US banks now offer PFMAite Group: PFM: A platform for customer engagement, February 2010

Over one third of Americans now use online bankingtools to manage their finances

– a 27% increase since 2009According to Intuit Financial Services: http://www.ifs.intuit.com/

60% more people use PFM provided by banks thanindependent PFM web sites

Online Banking Report, May 2010

Consumers are twice as likely to trust a bank over aPFM web start-up (71% vs 35%)

Javelin Strategy report on PFM Tools

Europe had a slower start but is now also picking up steam in PFM

BBVA launched „Tu Cuentas“ in 2008

PFM site separate from online bankingThird of online banking users active

Islandsbanki launched Meniga in 2009

ING launched TIM in 2010

Independent PFM web sites exist in many European markets...

...including Sweden...

... but they have limited tractionbecause transactions have to be manually imported

Only a handful of banks in Europe offer comprehensive PFM to their customers

...but many are in the works...and most are reviewing their

strategies

PFM Consumer awareness is still much lower in Europe than in the USA

Independent PFM sites exist in many European markets but are struggling

Meniga PFM Solution Live Demo

User adoption and feedback from Meniga‘s implementation in Iceland with Íslandsbanki

Íslandsbanki launched an ad campaign

Over 20% of the bank‘s online users signed upwithin 6 months

Over 75% of new users login again within 2weeks

Over 25% of users visit more than 5 times inthe first month and become highly active

Average 12 min and 35 pageviews per visit

Excellent Engagement Metrics

User Age Distribution

Younger than 25 25-34 35-44 45-59 60 and older0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Equal Gender Split

52% Male 48% Female

“A huge relief to have a good overview of my finances.”

Woman in her 30s

“This is the most user-friendly budgeting tool that I have ever known. Managing my money is really simple and I always have an up-to-date picture of where my money is going. I have improved my spending habits and am therefore able to pay down debt faster.”

Man in his 60s

82% are pleased or very pleased

Mjög ánægð(ur) Frekar ánægð(ur) Hvorki ánægð(ur) né óánægð(ur)

Frekar óánægð(ur) Mjög óánægð(ur)0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

Very pleased Pleased Neither pleased nor displeased

Displeased Very displeased

Overall, how pleased or displeased are you with Meniga?

88% say they will regularly use Meniga

How likely or unlikely is it that you will regulary use Meniga in the future?

Mjög líkl

egt

Freka

r líkle

gt

Hvorki

líkleg

t né ó

líkleg

t

Freka

r ólík

legt

Mjög ólík

legt

Ég m

un ekki

nota Men

iga fr

amar.

Ástæða:

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Very likely Likely Neither likely nor unlikely

Unlikely Very unlikely I wont use it again. Reason: “No support for my main credit card”

66% say Meniga has helped them see where they can improve financially

Has Meniga helped you see where you can improve in your household’s finances?

No: 34% Yes: 66%

41% say they have improved their spending behavior because of Meniga

Has your spending behavior improved after you started using Meniga?

No: 59% Yes: 41%

Why should retail banks care about PFM?

“Javelin data illustrates that financial institutions that install compelling personal finance management tools stand to reap the benefits of increased customer loyalty, higher usage, lower costs and added revenue.”

Javelin Strategy & Research, September 2009

PFM strengthens your brand

20-40% of your customers will love PFM

PFM is socially responsible–it‘s the right thing to do

80% of Meniga‘s users (20% of bank‘scustomers) say PFM is an important andvaluable service

Stronger effect for an early-mover

PFM vastly Increases Customer Retention

Some banks have seen a reduction of up to 50%in accounts closed after introducing PFMOnlineBankingReview, July 2010

PFM users build a history they don‘t want to lose

We live in a time where loyalty is on the decline

Customers who use the PFM tools are significantly more profitableOnlineBankingReview, July 2010

72% say Meniga increases their loyalty to their bank

State how much you agree or disagree with the following statement: “My bank offering me free access

To Meniga increases my loyalty to the bank”.

Mjög sammála Sammála Hvorki sammála né ósammála

Ósammála Mjög ósammála0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Strongly agree Agree Neither agree nor disagree

Disagree Strongly disagree

“PFM can be an even more powerful retention technique than other online features, even bill payment. Why? The average user with a dozen or so payees could move their bill payment account to another bank with an hour or two of work. But with current practices, it’s much more difficult, if not impossible, to move transaction history to another bank.”

Javelin Strategy & Research, September 2009

Customer Engagement and Cross-Selling

More and more people prefer never to visit branches

PFM is a major new low-cost channel for engaging withyour customers

PFM usage says a lot about users‘ financial situation and brings unique data to target marketing efforts

PFM is a natural channel for recommending productsand services

PFM helps you Acquire Customers

Stand-alone PFM attracts new customers

PFM can increase the effectiveness of otheracquisition methods, such as credit card offers

PFM users use your credit and debit cards more- 20% of Meniga users have increased use of cards issued by their bank since signing up

89% say they‘d recommend Meniga

How likely or unlikely is it that you will recommend Meniga to your friends?

Mjög líklegt Frekar líklegt Hvorki líklegt né ólíklegt Frekar ólíklegt Mjög ólíklegt0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Very likely Likely Neither likely nor unlikely

Unlikely Very unlikely

PFM increases Efficiency

PFM is a big step towards the „virtual branch“

PFM partly automates the advice customers currently seek in branches.

PFM should be part of a long-term strategy tostay close to your customers

“Personal Finance Management (PFM) functionality is the highest potential ROI project for retail financial institutions to implement in 2010.”

Online Banking Report, May 2010

Offering PFM to your customers is an investment in your bank‘s future...

... but deploying PFM doesn‘t have to be a long and difficult process

Meniga PFM Solution Deployment

Stand-alone web application software

On-premise deployment or SaaS

White-label offering

Flexible and straight-forward integrationoptions for any bank‘s technical platform

Step 1 Step 2

• Re-skin Meniga to match bank‘s branding policy

• Implement back-end integration to allow for secure flow of data (transactions)

Timeframe: Few months

• Gradually increase integration with online bank

• Move towards a seamless user experience

Timeframe: Variable

Stand-alone PFM PFM as part of online bank

Meet us again at FinovateEurope in London on Feb 1st 2011