Taking financial freedom one step forward with personal finance management

Personal financial management (PFM) in the realm of digital banking has been an area of significant promise, and continuous transformation across the world. It has transcended its initial status as a mere add-on or an afterthought and has become a pivotal aspect of modern banking services. In response to the growing demands of customers, who increasingly seek innovative features and tools for effective personal finance management, banks are in a constant state of evolution. PFM tools have emerged as essential components, not just as a means of differentiation but as key contributors to customer retention.

In the contemporary Vietnamese financial scene, the widespread adoption of digital payments and the growing digital-native mindset among individuals highlight the pivotal role of cutting-edge investment structures and emerging technologies. This has led to the indispensability of Personal Financial Management (PFM) tools for both financial institutions and their clientele. In fact, a recent study by Mastercard New Payments revealed that 89% of Vietnamese customers are managing personal finances digitally. What does growing popularity of digital platforms and PFM mean for Vietnamese traditional banks? Let’s find out!

Meet the next-gen customers and their financial habits

PFM has shifted from a supplementary service to a pivotal element in the financial ecosystem, serving as a strategic tool for banks to meet the needs of modern customers. The modern customer base is characterised as disruptive, being the first individuals who grew up with the internet. They do everything from shopping to therapy online, reflecting a willingness to invest in convenience and quick solutions. Their values are straightforward – live and let live – yet they readily indulge in their passions.

Simultaneously, millennials have weathered economic downturns, and Gen Z has witnessed how the pandemic can create financial dependencies. These experiences have shaped their financial habits, fostering a heightened awareness of their expenditures. Studies indicate a growing trend among millennials to embrace financial responsibility by setting aside a percentage of their income as savings. This presents an opportune moment for banks to appeal to this new generation of customers.

PFM tools can resonate strongly with the next-gen customers, not solely due to technological evolution but primarily because of their shared values and behaviours. Banks catering to the needs of millennials and Gen Z recognise their heavy reliance on smartphones and the internet for daily activities. By harnessing emerging technology, banks can effectively attract and engage these discerning customers.

How can traditional banks promise a sound future to their customers with PFM

“Insights of modern technology can be competitive with someone who is personally advising you, and at a fraction of the cost.” Luis Viceira

These wise words shared by the Professor and Senior Associate Dean for International Development at Harvard Business School during his study on millennials and their adoption of Personal Financial Management (PFM) continue to echo loud and clear even to this day!

Recent innovations such as enhanced data analytics capabilities, open banking, automation, and more have made it increasingly feasible for banks to offer AI-driven solutions to their customers. Additionally, marketing these solutions has become more accessible, given the heavy usage of social media by millennials and Gen Z.

With PFM, traditional banks now have the opportunity to propel forward and ensure a sound financial future for their customers. By leveraging data-driven insights, and historical consumption patterns, banks can offer tailored financial solutions, fostering a more personalised and automated approach to managing finances. This helps traditional banks understand customers better, and meet their expectations. And also navigate the evolving landscape with contextual offerings.

How personal finance management benefits traditional banks

According to a survey by RFi and The Financial Brand, over 75% of respondents said they would prefer to use PFM tools from their primary financial services provider i.e., their bank rather than a neobank. The trust and familiarity associated with traditional banks seem to outweigh the appeal of neobanks, emphasising the significance of the existing customer-bank relationship in the adoption of PFM tools.

Integrating a PFM platform is crucial for banks today. It’s not just about keeping up; it’s about meeting what customers, especially millennials and Gen Z, want – smart digital tools for managing money. PFM tools give insights, help with budgeting, and guide investments, boosting customer loyalty and showing that the bank is on the innovation wave. With technology, banks can stand out, run smoother operations, and tap into new markets. It’s not just a trend; it’s a smart move to keep customers happy in this digital finance era.

Want to know where to start? Get in touch with our experts today!

Do Thi Huong Tra

Do Thi Huong Tra, Vietnam Country Manager at Clayfin, is an accomplished International Banking Technology Executive driving digital banking strategies to fortify Vietnam's banking system. With a focus on innovation, Tra implements cutting-edge solutions to enhance efficiency, positioning herself as a key influencer shaping the future of banking in the region.

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