BUSINESS TECHNOLOGY MEDIA COMPANY
Companies
Sectors
Internet

Competition heats up in PFM space

Read time 4min 30sec

As Nedbank moves into the personal financial management (PFM) service space with MyFinancialLife, First National Bank (FNB) has said it too is piloting its own PFM system.

FNB Online Banking CEO Lee-Anne van Zyl says the pilot got under way this month with a select audience on FNB's online banking platform. “We hope to have the first phase of the system available to the entire online banking customer base by the end of the year.

“In parallel, we are currently working on the next phase of the PFM system, which will be a more enriched solution, delivering the full benefits of a PFM tool. This is currently in development and we are unable to provide a confirmed timeline for an expected launch date. In addition to FNB Online, we will look at ways to make these new tools and innovations available on the online banking FNB Banking App,” says Van Zyl.

As of last week, FNB has also been piloting the new version of inContact, which essentially acts as an instant messaging service.

“The new version of inContact currently presents a user with a timeline version of expenditure. Once the PFM tool is available on our channels, the next level would be to see how we can integrate push messages relating to same.”

In reference to Nedbank's MyFinancialLife and independent PFM service 22seven, Van Zyl adds that FNB's secondary user profile options are in place for its online banking clients who choose to use other PFM tools.

“We do not believe that a secondary user profile poses additional risk to the client as it has limited functionality and a different user name and password to the primary user profile. If correctly set up to allow 'view access' only, this will limit the exposure of client information to transaction history, balances and account numbers,” says Van Zyl.

“It is important to emphasise that if clients choose to use other PFM systems, it is their responsibility to keep their personal details safe. If clients share their primary transactional details with any third party, this exposes clients to the risk of unauthorised access.”

Healthy competition

Unperturbed by the new competition, founder of 22seven Christo Davel, says he is “delighted” that Nedbank is entering the PFM space. “It just goes to show that people are challenging their relationship with money, and that there is clearly a demand for such services.”

When asked if 22seven was concerned at all by the competitive threat a free PFM service (22seven charges a subscription of R70 per month) from Nedbank could offer, Davel says the departure point of the two services is very different. “We know we can help change people's behaviour by acknowledging that we are by nature, emotional about money.

“Just showing the same old budgeting principles in pie charts and bar graphs alone cannot change our behaviour. 22seven is not a budgeting tool; it's a service that fundamentally alters people's relationship with money.”

Davel says the release of PFM services by the big banks will result in the entire space growing locally, which he believes will only serve to benefit the consumer as there will be a broader range of options and services to compare and choose from.

“Some people will prefer to use a more traditional PFM service offered by a bank, but others will prefer to use an independent service like 22seven,” says Davel, adding that the 22seven offering is “significantly different” to what the incumbents may offer.

While 22seven does not reveal any figures regarding its user base, when asked about how the service has been fairing since the introduction of its subscription model, Davel says: “We are doing exceptionally well, and have exceeded expectations.”

Tread carefully

At the end of May, Absa launched its online banking portal, Absa Online, which includes the beginnings of PFM functionality and includes a new interface with graphics that give customers a dashboard view of their financial situation.

Absa has remained firm in its stance against the use of third-party services and has consistently warned its clients against divulging any of their confidential information. Following 22seven's launch, Absa even went so far as to try and block financial aggregator Yodlee from accessing its Web site. Like 22seven Nedbank's MyFinancialLife also uses Yodlee to facilitate the connection between user's online banking profiles and the PFM service.

At Thursday's launch of MyFinancialLife, Nedbank was asked if it was concerned as to how the other banks may respond to their clients using the service. Nedbank said it advises competitors to “think very carefully” about how they will respond. “We hope sanity will prevail, and there will be a revolution of demand.”

Nedbank's offering is expected to become available by the end of August, and the online service will be available for free to all South Africans.

Login with