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Why STAR Financial Bank Went All-in on PFM

By: Kristin Marcuccilli

Why invest in PFM? This is one of many questions that banks are currently tossing around about personal financial management technology. Will our customers use it? Where is the return on investment? With traditionally low user adoption rates, many industry pundits have closed the door on the future of PFM. Seems like a nice idea, they say, but not something consumers are going to invest time in.

At STAR Financial Bank, we asked these same questions, read the statistics and listened to opinions good and bad. In the end, optimism won out and we now provide our nearly 68,000 customers in Indiana with a way to track their personal finances. STAR Bank decided to go all-in on PFM. Here’s why …

Customer Motivation

As a community bank, based in Fort Wayne, Ind., our focus is our customers. Ultimately, we decided to implement PFM in order to provide our account holders with a product that is useful in their day-to-day lives. Our customers want to have more control over their spending, saving and budgeting — particularly given the challenging economic conditions. While some have been lucky enough to recover from underwater mortgages and job losses, there are still those who are forced to stretch their paychecks and are struggling to get out of debt. In many situations, trying conditions have left our customers with a less than desirable financial outlook, discouraging them from wanting to interact with their budget.

Our desire to offer a motivating approach to money management is the primary reason we decided to partner with Provo, Utah-based MoneyDesktop for our PFM platform. We worked with the company to white-label the product and launched STAR Bank’s touch PFM tool in January 2013.

After reviewing several providers, our team was impressed by MoneyDesktop’s realistic approach to PFM. Instead of just providing a fun tool to play with, touch helps customers set budgets based on their actual spending behaviors, not based on what they wish spending would be. PFM technology that presents only the best-case scenario discourages the user when they miss unrealistic goals, causing them to abandon the service. A single mother making minimum wage probably won’t save 10 percent of her income every month and will get tired of missing that unattainable mark. That is why our PFM solution helps users set small, achievable goals that encourage forward progress.

These benefits feed into what we see as the most important aspect of PFM — user experience. While budgeting may not be the most appealing activity, touch delivers a fun and engaging experience to our account holders. This was another important factor in our selection of MoneyDesktop, specifically the access our customers have to BubbleBudgets. Doing away with traditional bar graphs and pie charts, BubbleBudgets uses circles of various sizes and colors to enhance the visuals of PFM and make it easy for customers to know their budget status in one glance. Users love interacting with the bubbles and moving them around on the screen to change priorities and limits. The balance between a realistic approach, ease of use and an interactive interface was vital in the early success of our PFM platform.

Leveraging Mobile

A recent report from Aite Group states that mobile banking will grow 300 percent over the next four years. The report also predicts the number of U.S. consumers using a mobile device to access their bank accounts to increase from 33 million to 96 million by 2016.

In response to overwhelming customer feedback, STAR Bank began exploring mobile banking and PFM in the spring of 2012. MoneyDesktop was one of the only vendors we reviewed that offered a PFM mobile app. Touch was branded in line with the notion that people want to be in touch with their finances anytime, anywhere. With mobile access to PFM, customers can do just that. The key was to make sure that data was synced in real time across the desktop, smartphone and tablet devices. Our customers have provided great feedback on seeing the same user interface whether they are managing finances on their desktops at home or on mobile devices while standing in line at the grocery store.

Selling the Service

Some in the industry believe that PFM has not experienced strong user adoption because financial institutions do not effectively sell it to their account holders. With touch, we saw an opportunity to not only promote our new PFM platform, but to also show off our complete mobile offering. In addition, it gave us a chance to position the bank as a leader among our competitors. As a family owned, community bank, this is a strong differentiator for STAR Bank. We pride ourselves on offering better technology and service than our big bank competitors.

To promote touch, STAR Bank launched one of the largest marketing and advertising campaigns in the bank’s 70-year history. The campaign was designed to align with New Year’s resolutions to improve saving, budgeting and overall financial health. Our efforts have included a television spot, movie theater screen advertising, online advertisements and promotional displays inside each banking center. We have also provided our bankers with iPads to conduct touch demos for current and prospective customers, allowing them to explore how it works.

Customer Retention

By offering PFM as a free service to any online banking customer, we anticipate seeing an increased level of satisfaction and engagement with all our services. Additionally, by serving as the hub for customers to view their entire financial pictures, we expect to improve customer loyalty and retention. We feel the advertisements also give us additional exposure to potential customers who will select our bank to have this PFM capability.

Customers have responded. Since the launch of the campaign to introduce touch, we have seen more than 4,500 downloads of the app. It’s early in the process, but both STAR Bank and our customers are already enjoying the benefits of going all-in on PFM.

Kristin Marcuccilli is vice president of strategic planning & marketing at Indiana-based STAR Financial Bank.

Copyright (c) April 2013 by BankNews Media