The Future of Cross-sell is PFM

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Many industry analysts say that personal financial management (PFM) is the future of banking. Currently, PFM is only being used by about 3% of consumers--mostly because of usability issues. However, once all the kinks are worked out, what kind of future could PFM hold for financial institutions (FIs) that choose to integrate it into their business for use by customers?

The data that these types of platforms will provide to FIs will be priceless when it comes to deepening customer relationships through cross-sell. PFM gives customers access to a plethora of features to facilitate their personal financial goals.

If FIs can collect data through these features, they will have tons knowledge about their customers-where they are spending their money on, what types of activities they are spending money on (entertainment, travel, groceries, home improvement, etc.), and even what their financial goals are for the future.

This gives FIs an immense opportunity to cross-sell their products in order to become part of their customers' everyday lives. FIs could begin to work with retailers to cross-sell co-branded credit cards to customers who have specific interests. A customer that spends a big percentage of their money each month on do-it-yourself home projects would benefit greatly from a credit card that offers a 10% discount at a home improvement retailer.

The possibilities are endless. FIs could also use the financial goals of their customers to cross-sell other products. A customer whose goal is to save $2000 dollars in one year for a vacation could be interested in a high interest savings account, or even daily alerts from a discount travel website.

The capability to use the information collected from personal financial management platforms to cross-sell product lines will require a great deal of advanced analytics to make sure the information is used in a way that will benefit the FI.

Technology providers already have the ability to interpret many sources of data in order to make specific decisions. Designing solutions that are currently used in originating accounts such as demand deposit accounts and credit cards for FIs can be tweaked in order to incorporate data coming from PFM platforms.

PFM is a huge opportunity for FIs to deepen their customer relationships through cross-sell. Presently, PFM hasn't been adopted by many consumers, but its popularity is growing. Awareness and usability are crucial to the adoption of these tools, but once PFM popularity increases, banks can use this tool to capitalize on not only their customer relationships, but things such as co-branded offers. By using cross-sell, FIs can create a dynamic customer experience and increase their profitability.

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