Personal Financial Management Summary Prepared for: NBCUniversal December 20, 2013

Personal Financial ManagementSummary

Prepared for: NBCUniversalDecember 20, 2013

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Table of Contents

Executive Summary - Recommendations……………..………………….....3

Industry Overview……………………………………………………………………5

Competitive Assessments………………………………………………………..11

State of the Industry……………………………………………………………….17

Utilization……………………………………………………………………………..23

Consumer Insights………………………………………………………………….28

Marketing/Advertising…………………………………………………………….35

Emerging Technologies…………………………………………………………...37

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Executive Summary: Recommendations

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Based on synthesis and analysis of the market, ORC recommends the approach to developing a PFM offering:• Identify an unmet need that is not being delivered via current tools, as the space is

extremely crowded. In particular, select a target demographic, identify the tools most important to them, and build a solution that lets them access it via any channel and device, rather than trying to be a one-size-fits-all solution.

• Understand that key features available today (premium content, number of institutions accounts available to aggregate, mobile applications) are quickly becoming commoditized and required elements of serious PFM products.

• Segmentation may be the key to success: Being all things to all people may not provide enough differentiation to stand out in the crowd.

• Incorporating social media and networks will be key to success, particularly as you engage the younger generation, which has literally grown up with a social mindset.

• Security will remain important, as those that seek to do harm are relentless, particularly with respect to financial information.

• Simplicity and convenience can’t be overlooked, as early adopters who are comfortable with technology are already using PFMs. Mass market growth will be achieved by reaching out to less-technologically or financially savvy customers.

• Communication and awareness is key to gaining share. Very little traditional media spending was found focusing solely on PFM products, which is one possible reason for the low rate of consumer adoption.

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Industry Overview

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Personal Financial Management (PFM)

Personal financial management (PFM) encompasses an array of online money management, tracking, information, and planning tools and represents the next evolutionary step beyond online banking and bill payment. PFM involves a more in-depth relational approach to online account access. Many parties - including depository institutions, investment providers, financial planners, and third party providers – have introduced online services that come under the umbrella of PFM. Product offerings, however, tend to be inconsistent and are evolving - ranging from Web pages with financial "self-help" articles to more complex dedicated sites that include account tracking, tools to chart and budget spending, and financial planning tools. At their most advanced, some PFM sites import data from multiple providers and include analytical capabilities providing a total view of a consumer's financial position. These tools, along with online banking and bill payment, can add "stickiness" to a relationship.

As PFM continues to evolve, many financial institutions see it as key to their future customer relationship strategies (acquiring, broadening, and enhancing relationships) and are moving to implement or improve their offerings. It is essential that the customer perspective be understood in terms of the degree of information and functionality desired in PFM sites.

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Personal Financial Management Tools

PFM tools are designed to give consumers a greater level of control and comprehension over their financial lives. The tools generally include one or more of the following features:

An aggregated dashboard view of all their accounts, from investments to financial, to payment, to insurance, and more

Specialized information or news related to personal financial topics

“What-if” scenario planners or calculators Categorization and visualization of

spending habits and trends Access to financial advice or

recommendations A convenient platform to access data, via

the Web or mobile devices Cash-flow modeling or forecasting, based

on financial data

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Personal financial management tools were once primarily found in accounting software packages, but have evolved to Web-based platforms with mobile-access applications

Consumers looking to track expenditures or manage multiple accounts had to use software such as Peachtree Accounting or Quicken to aggregate accounts

This software was relatively expensive, required a significant amount of manual data entry, and often required some knowledge of accounting concepts

Until the proliferation of broadband Internet access in the late 1990s and early 2000s, most consumers looking to aggregate accounts had to do it manually.

Today’s applications, which save data in the cloud or on private company servers, can pull data from a variety of sources (sometimes in real time), and allow users to have a holistic view of their financial landscape.

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Today’s PFM Tools Are Highly Variable, In Terms of Focus and Functionality

The most basic tools are usually found on financial websites, which provide personal finance-related content, along with an occasional stock tracker or mortgage calculator thrown in to create a more personalized feel. However, with the exception of stock tickers, no personal data is pulled or saved on the site.

PFM tools offered by credit-issuing institutions are more robust, offering the ability to automatically track spending, and, in some cases, manipulate how finance charges are applied, providing more control over one’s account than previously available via phone account management.

Banks, credit unions and other primary FIs tend to offer the among the most robust PFM offerings, which include full account integration across a variety of account types, as well as providing real personal financial planning tools. Some also include fully integrated investment monitoring and tracking tools.

Investment-driven PFM tools put the focus on long-term personal financial management solutions, providing full investment account aggregation via a dashboard. Many also provide investment recommendations or advice, either via a commission-based or flat-fee model.

Independent providers of PFM tools generally offer full account aggregation, and many providers are actively seeking to provide advanced financial modeling tools, to better assist customers in planning for their short- and long-term goals.

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…but they haven’t yet gained traction… The key issues with PFMs revolve around customer

usability, privacy, security and consent of data usage, and, particularly with investment-related PFMs, transparency of recommendations.

Another major issue is the issue of providing real value: if the PFM doesn’t provide tangible benefits beyond basic organization, casual users are unlikely to adopt it, especially if they are not “organization-focused” people.

Today’s consumers also prefer to have fully integrated applications that exist on the Web, and on mobile applications, especially considering that tablet and smartphone usage has been on the rise.

Nevertheless, security remains a major issue: consumers are worried about having all their info available in one place, particularly on a mobile device, which could easily be lost or stolen.

The PFM tools that have seen adoption by consumers are made extremely simple to use, feature seamless account aggregation, feature robust security, and have transparent policies and procedures relating to how their personal spending and saving data is used or offered to partners.

Basic Visualizations (Entice): Real-time feedback in relation to day-to-day finances including visualization of balances, transactions, etc.

Analysis (Educate): How does customer spend/save relative to peers, categories, merchant, geolocation and holistic view of finances.

Engagement Tools (Activate): Engaging tools to help customer improve financial situation through intelligent budgeting, goal development, forward-looking assessments.

Mapa Research says the following elements are required for successful adoption of PFM tools by consumers.

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Competitive AssessmentsThere are literally thousands of PFM implementations in the market, from independent solutions to white-label versions of popular platforms. The tables on the next four slides provide a representative selection of PFM sites and tools by category which have been assessed according to platform, business model, key features, and a SWOT analysis.

* Please reference the accompanying “PFM Competitor Profile” document for full profiles of each of the following PFMs.

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Key Assessments from Current PFM Offerings

Generally speaking, the institution-driven PFM offerings focused on providing a holistic financial picture for users, and incorporated tools (such as expense tracking, savings calculators, and budget planning) designed to increase the stickiness of the institution. While not on the bleeding edge of functionality, most of these PFMs incorporated a solid range of tools.

Credit-driven PFM tools were more limited in terms of being able to present an overall financial picture, though they do seem to be more innovative, in terms of offering spending-related tools.

Investment-driven PFM tools are big on providing data and account aggregation, and some are even branching out into providing financial management and advice. However, these PFM tools do not make day-to-day financial management a priority.

Independent providers of PFM tools could be considered the most broad-based of the space, providing a mix of cutting-edge tools that run the gamut, from day-to-day spending and modeling tools, to investment-focused PFM features.

Conversely, media properties offer very little personalized or account-based PFM tools, beyond stock-tracking modules and basic, non-account driven calculators. Their perceived value is in the premium content found on the site, as provided by their parent editorial staff or partners.

Cost

Business Model

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Current PFM Offerings at a GlanceEase o

f U

se

Feature Set

Easier

Harder

Bare-Bones (mostly financial news, a few calculators, perhaps

stock tracking)

Feature-Rich (account dashboards, cashflow modeling, investment advice)

The chart below highlights 20 PMFs across a variety of segments, based on a subjective assessment of each PMF’s feature set and ease of use for typical consumers.

** Most media sites feature very little account aggregation technology, while full account aggregators such as banks and independent PFM providers often

do not have premium editorial content.

Middle of the Road (Account

aggregation, some planning tools)

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Institution-Driven and Credit-Driven PFMs

CategoryPrimary Platform

Business Model Key Features Strengths Weaknesses

Opportunities Threats

Bank of America MyPortfolio

Web Customer value/stickiness

External account aggregation, spending profiles

Large potential customer base, proven platform (Yodlee)

Does not appear to incorporate individual stocks or funds

Consumers tend to trust banks PFM more than unaffiliated ones

More robust tools are available from other providers

Wells Fargo MyMoneyMap


External account aggregation, spending profiles, budget forecasting

Large potential customer base, innovative feature set

Adoption of tool is low, given the length of time it has had a PFM

Consumers tend to trust banks PFM more than unaffiliated ones

Some providers may provide similar functionality via mobile apps

Geezeo Web and Mobile API

White-label provider of PFM platform

Account aggregation, expense and budgeting tools, embeddable API

Large roster of FI customers

Not as strong with large FIs

Credit unions need to incorporate advanced PFM tools, and don't have the resources

Some well-known independent players (such as Mint) may target this segment

State Farm Pocket Agent

Mobile devices (iOS and Android)

Customer value/stickiness

External account aggregation, spending profiles, integration with insurance accounts

Can incorporate investment accounts in the mobile app

Many consumers may not use State Farm as a primary account

Mobile-centric applications may be more popular among current and future PFM users

Other flashier and more full-featured PFMs could steal away users

Chase Blueprint


Credit account aggregation, ability to adjust payment interest application on purchases

Large potential user base, innovative feature

Does not aggregate other types of accounts

Ability to calculate payment schedules dovetails with PFM trend of incorporating forecasting tools

Users generally gravitate toward simpler PFM tools, rather than ones that are tied to product features

Discover Web Customer value/stickiness

Account aggregation, expense and budgeting tools

Paydown Planner and Spend Analyzer work well to provide a clear picture of current financial scenario

Inability to aggregate data from other institutions limits appeal

Consumers are actively seeking paydown or planning tools

Lack of advanced features will limit appeal, given the vast number of better-equipped tools on the market

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Investment-Driven PFMs




SigFig Web and Mobile Lead generation Investment account aggregation, personalized financial advice and recommendations

Strong financial data tracking and analysis

Some may find commission-based business model a conflict of interest

Consumers are looking for more robust investment-management tools that are available via Web and mobile

Commission-based financial advice has largely been decried as not in the customers' best interest

Yahoo! Finance Web Advertising Financial news and guides, large assortment of tools and calculators

Yahoo! Brand name, high site traffic

Limited true PFM functionality (cannot import other financial data)

Some consumers may be wary of providing personal financial data, and prefer anonymous tools and calculators

Full-featured PFMs could integrate more third-party financial news as part of their offerings

MSN Money Web Advertising Stock tracker, lots of financial market news and insights, basic calculators

Strong brand equity via CNBC content

Limited true PFM functionality (cannot import other financial data)

Some consumers may be wary of providing personal financial data, and prefer anonymous tools and calculators

Full-featured PFMs could integrate more third-party financial news as part of their offerings

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Independent PFMsCategory

Primary Platform

Business Model Key Features Strengths Weaknesses Opportunities Threats

PersonalCapital.com

Web / Mobile Fee Based on Assets Under Management

Free investment analysis, account aggregation, managed advisory service

Strong leadership, transparent business model, robust tools

Investment floor for advisory services could limit market potential

Growing number of people want to see their portfolio in detail, but get advice from professionals

Private investment advisors could offer a similar tool to their clients

Mint iPhone/iPad Lead generation Auto categorization, budgeting, alerts, spending graphs, goal planning and setting, investment tracking, bill payment reminders, universal account viewer

Very strong brand recognition, cutting-edge tools, diversifying revenue streams

Mint is the "leader," and therefore everyone is gunning for them

Credit unions and banks are looking to leverage any name recognition, and partnering with Mint could provide that edge

Some banks offer similar or more powerful tools, which some consumers implicitly trust more than independent PFM providers

Yodlee/ Yodlee Money Center

Web / Mobile API White-label provider of PFM platform, fee-based

Account aggregation, advanced API, growing incubator network

Sells to Fis, eliminating direct competition with Mint and others, also offers a free version (Money Center) to build brand recognition

The overall market for bank-based PFMs is finite

More finance-related companies are beginning to offer PFM-based tools, and need platforms

Competition from banks, other white-label providers, and independent aggregators

Manilla Web / Mobile Customer value/stickiness, paid fees by billers

Partnership with AOL, account aggregation tools

Strong account and user growth, ability to pull in accounts beyond financial services

Focus on bill payment could alienate stock-focused customers

Online bill payment on the rise

Some billers or banks already aggregate bills

Hello Wallet Web / Mobile Fee Based ($100 membership, usually sold to employee benefits departments)

Strong focus on financial literacy and responsibility, strong aggregation tools

Sold to benefits departments, in addition to direct sales to consumers, model incorporates a philanthropic element

Upfront cost could turn off potential users

Workplaces are looking for additional benefit tools designed to help their employees stay financially healthy

Other providers could adopt this model fairly easily

MoneyDesktop (offers to Fis)

Web / Mobile White-label provider of PFM platform, fee-based

Account aggregation, BubbleBudgets planning tool

Sells to Fis, partners with payment networks, innovative budget tool

Strong growth in clients and utilization may not be sustainable

Credit unions, a key target, are looking for innovative PFM tools

Other white-label providers are developing budgeting tools

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Media Properties




CNN Money Web Advertising Personal finance content, some PFM tools

Strong brand, stock tracking tool

Minimal set of PFM tools

Consumers are clamoring for personal finance knowledge

Other full-featured PFM tools may incorporate premium content

WSJ MarketWatch

Web Advertising Personal finance content, some PFM tools

WSJ name, strong content, stock tracking




FoxBusiness Web Advertising Personal finance content, some PFM tools

Strong content, stock tracking




Daily Finance Web Advertising, lead generation

Personal finance content, some PFM tools, lead-generation focused-section

More robust personal finance planners and calculators, stock tracker

PFM calculators are not able to import or save user data



Kiplinger Personal Finance

Web Advertising Personal finance content, some PFM tools

Very focused content, lots of financial guides and calculators

PFM calculators are not able to import or save user data



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State of the Industry

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History of PFM Tools Personal financial management tools were originally designed to provide more detailed monitoring of a specific single account within a financial institution, but have evolved over the past several years. Wells Fargo was among the early bank entrants into the space, putting financial statements online in 1995. Other banks soon followed, but many of the tools were limited to managing money within a single institutionSince the early days of PFM industry, the major innovations and transitions have included:

• A switch from being offered solely by large banks and FIs, to a diverse range of companies, including credit card issuers, media sites, billers, retailers, and investment-focused firms

• An evolution of simple account status screens to fully equipped dashboards capable of pulling financial data from thousands of FIs

• Some providers have abandoned the direct-to-consumer model, such as Yodlee, and have focused on white-labeling their PFM platforms to financial institutions

• An increase in the use of mobile applications, for smartphones and tablets• A few distinct business models have emerged:

• Lead generation: companies pay a specific fee for each customer delivered via offers, based on data collected through the PFM, regarding spending preferences and trends

• Advertising: PFM hosts receive a fee for each clickthrough to a sponsor’s ad or service

• Transactional: PFM providers recommend specific tools or strategies (usually related to investments) and are paid a commission or fee

• Fee-based: A PFM charges a fee equal to a percentage of assets under management, similar to a financial adviser’s fee

• Stickiness: A PFM is not set up specifically to generate discrete revenue; however it is used to increase the stickiness of the Web site, which can result in additional utilization, reduced churn or turnover, or additional cross-selling opportunities.

• Despite the advances in the depth and breadth of PFM offerings, US adoptions remains low, with only 1 in 5 Americans currently utilizing these tools.

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People are increasingly concerned about managing their financial future…

According to the BlackRock U.S. Investor Pulse Survey 2013, U.S. investors noted five key themes :

1. Concerned and lacking confidence in their financial futures

2. Reluctant to invest as people hold on to cash3. Knowledge gap around income-generating

opportunities4. Squeeze on household incomes5. Widespread fears about meeting retirement

goals

In a separate Impacts study conducted in 2012, both younger and older Americans were equally concerned about their financial future.

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Many people are concerned about a lack of budgeting skills or financial discipline.

The National Foundation for Credit Counseling (NFCC) and the Network Branded Prepaid Card Association (NBPCA) 2012 Financial Literacy Survey “revealed a disturbing lack of basic financial skills that are critical to building a stable financial future.”

• More than half of U.S. adults, 56 percent, admit that they do not have a budget;

• One-third of U.S. adults, or more than 77 million Americans , do not pay all of their bills on time;

• Thirty-nine percent of adults carry credit card debt over from month-to-month;

• Two in five adults indicated that they are now saving less than they were one year ago, and 39 percent do not have any non-retirement savings; and,

• Twenty-five percent of those who do not currently have non-retirement savings indicated that, if they did begin to save, they would keep their savings at home in cash.

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Clearly, consumers are asking for tools to help them manage their financial lives…

According to a 2013 report from PwC entitled Experience Radar 2013: Lessons from the U.S. Retail Banking Industry:

“3 out of 5 (customers) want the option of researching products on their own rather than asking bank employees. Customers are asking for more digital options.”

According to 2013 research from Personetics, “When it comes to ‘managing’ their finances, consumers want quick and easy solutions to their immediate needs. They want control. They want assistance with their day-to-day finances.”

A national survey of more than 600 U.S. adults conducted for Varolii Corp. in 2013 revealed a surprising disparity in what consumers want in a mobile banking app versus what they actually get from their banking provider.

• Americans increasingly want… nay, expect to be able to deposit checks and receive real-time notifications on account activity from their mobile banking apps.

• According to the research, most retail financial institutions are failing to deliver on consumer expectations with first- or even second-generation mobile banking apps.

• 64% of smartphone users in the US believe it is their bank’s responsibility to inform them if they do not have sufficient funds to pay a bill, and among respondents under the age of 24, this share rises to 73%.

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Millennials, in particular, are seeking guidance…Several surveys and news stories published in 2013 focused on Millennials found that this group, perhaps more than others, is actively seeking help with their financial lives. They have been:

• Raised on the Internet and disheartened by having watched the older generations suffer through the tech bubble of 2000 and the recession of 2008

• They see money as a path to career freedom, where they can pick up and start again at will as soon as a more interesting offer comes along.

• Increasingly they turn to Web-based wealth management firms or choose do-it-yourself brokerage accounts“Three in four 25-to-34 year olds (a group that includes older

Millennials and younger Gen X members) look first to their peers for money guidance, according to a survey from the American Institute of CPAs and the Ad Council.”

According to a Wells Fargo survey, “Despite the Millennials’ confidence and self-reliance on their future, they most often turn to family for advice about money. When specifically investing, 36% of Millennials turn to their parents or other family members as their first source for guidance, followed by a paid professional investment advisor (17%) and online sites (15%).”

“Millennials, those born roughly between 1977 and the early 2000s, aren't like previous generations because they don't deal with physical money as often, they swipe cards and put them back in their wallet. So the concept of how much money they have to spend is hard for them to gauge”, said Jack Fuentes, CEO of Level.

According to a new survey from the American Institute of CPAs and the Ad Council, “three quarters of young adults, or 78 percent, use their friends’ financial habits to determine their own. The vast majority, 66 percent, wants to keep pace with their peers on where they live; 64 percent say the same thing about what they wear. Nearly two-thirds experience pressure to keep up with the types of places they eat and the gadgets they carry.”

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Utilization

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Low Adoption of PFM

According to Credit Union Times, about one in five of U.S. consumers use PFM, though that percentage has been projected to increase to about 30% by 2014.

Older Americans, in particular, have shied away from PFM usage.

• Only 16 percent of boomers use these types of tools (compared with 44 percent of Gen Yers), according to a 2012 survey of 1,115 consumers by Aite Group, a financial services research and advisory firm.”

According to 2013 research from The Financial Brand:

• 34% of current bank shoppers use PFM tools• 11% take advantage of PFM tools provided on

their primary institution’s online banking website

• 23% use websites like Mint.com.

Despite the promises of easier account monitoring via dashboards, as well as specific advice and planning tools, adoption of PFMs has remained low, according to a variety of independent sources.

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So what do people really want in a PFM?

A 2013 Javelin Research representative survey of 3,000 U.S. consumers found that the ability for a customer to view all of their accounts was the most important feature in a PFM.

Javelin grouped the features into four tiers, based on the likelihood of using the feature, expressed as a percentage.

TIER 1: 49%View all account balances

TIER 2: 34%-38%Earn points or enter sweepstakes |

Rewards reminders | Personal finance alerts | Comparison pricing | View finances

on a calendar | Price-change alerts

TIER 3: 29%-31%Record cash purchases | Card-reward

recommendations | GPS-based merchant discounts | Cash-flow estimator | Financial

planning tools | Automatic budget categorization

TIER 4: 16%-23%Motivational alerts| Investment tools | Archive business expenses | Social network shopping

recommendationsAugust 2012N=3,000, all consumers, Javelin Strategy & Research

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Notable highlights of successful PFMs

• Ease of Use: People gravitated to bank-run PFMs because their primary bank account—usually a checking or savings account – was likely already set up to handle online banking, and an integrated PFM tool doesn’t require the user to set up a new account. By inputting account and routing numbers, it’s easy to pull other accounts into an existing account structure.

• Stickiness is Key: According to MasterCard, “Consumers, more likely to switch banks as a result of dissatisfaction with customer service or increased banking fees, are intensifying their search for the best rates, products and services. Globally, those with just one banking relationship have fallen from 41 percent to 31 percent since 2011, and those with three or more banks have increased from 21 percent to 32 percent in the same period. When shopping for a bank, consumers are looking for easily navigable online banking portals, the best interest rates, multiple account features and availability of promotions or offers.”

• Forecasting Could be the Segment’s “Killer App”: The broad idea of these tools is to provide visual estimates of account balances for a certain period of time ahead based on the user's calendar data like upcoming bills. Consumers would be able to use the tools to calculate whether or not they can afford to make long or short term purchases based on cash flow. Banks such as Wells Fargo, independent PFM providers like Planwise and white-label PFM providers such as Banno are all working on this technology, which needs to pass a number of compliance tests and must be tested to ensure accuracy and data integrity.

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Notable highlights of successful PFMs continued…

• Real-Time Data: The ability to provide users with a real-time view of their financial position through a mobile app could help spur more responsible purchasing by consumers. It would also add a significant amount of value to PFM tools that have lacked a truly unique reason to be used.

• Banks Still May be Best Suited to Winning PFM Space: Despite the significant technological achievements of independent or third-party PFM tools, Javelin Strategy & Research senior analyst Mark Schwanhausser says banks and credit unions are in the best position to win the PFM space because they hold the financial information of their customers, which is a number-one reason people use PFM tools: account monitoring.

• Impact of PFM Tools: The impact of PFM tools is largely dependent upon how consumers utilize them, though a 2010 survey by Aite suggests that personal finance tools “actually change people's behavior, too. In a survey of people who use such tools, 3 in 4 said they now have better control of their finances. Two in 5 said they are saving more money, and 1 in 5 said they are paying less in late fees.

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Consumer Insights

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Who Is Using PFM Tools?

Only 1 in 5 Americans today use PFM tools, and they prefer to mix and match between various providers and platforms.

Javelin Research from 2012 estimates that 49 million Americans use PFMs today. The most popular tools are provided by:

• Primary financial institutions (56%)• Credit card networks (17%)• Merchants (10%)• Online or mobile payment providers (7%)• Mobile Carriers (5%)• Independent Mobile App Developers (3%)• Billers (3%)

However, many people who are highly focused on their financial situation, as well as and Gen Y.2 Consumers Are Likely to Use PFM Tools From Non-FIs, due to their desire to find the absolute best technological and functional fit for their needs.

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Nonetheless, PFM usage rises when consumers already use bank-based online account management tools…

Javelin Research conducted in 2013 found that the majority of consumers that used online banking, mobile banking, and bill payment services through their primary financial institution also used PFM software.

71%-75% of online banking, mobile banking, and bill payment services used PFM software, bank PFM products, or

Web-based PFM offerings.

The percentage of people using PFM tools rose as investible assets rose to 69% at the $1M level, after which utilization falls back by 4%, according to Javelin Research.

58%-69% of people with investable assets of less than $300,000 to more than $1 million used PFM software,

bank PFM products, or Web-based PFM offerings.

February 2013Usage is defined as using any type of PFM tool within the past 90 days.Strategy & Research

A June 2013 study by Celent found that bank websites prevailed as the top method for managing personal finances, particularly among those who own smartphones.

42% of US smartphone owners reported relying primarily on their

bank’s website to manage their finances vs. 27% of non-smartphone

owners.

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Need to go mobile…

Meanwhile, the Interactive Advertising Bureau (IAB) in April 2013 released “Mobile and Money,” a new study conducted in partnership with InMobi and Viggle, that looks at how mobile users are leveraging smartphones and tablets to manage their personal finances. Key findings include:

Several published studies have produced findings that indicate that people are increasingly using their smartphones and tablets for mobile banking, payments, and other financial-related activity. Indeed, The Credit Union National Association (CUNA) released a survey that finds that among smartphone users, more than 50% use their phone to make some type of mobile payment, despite security remaining a major concern.

58% regularly use their bank’s mobile app, while another 25% are aware of the app, but

have yet to use it

50% use their bank’s mobile-optimized web site, while another 26% are aware of the

feature, but have yet to test it

42% pay mobile phone or other bills via their smartphone

34% pay a business for real-world goods/services with their smartphone

37% buy tickets for a movie, concert, travel or other event

45% use their mobile phone to purchase digital music, movies or smartphone apps

19% of people pay friends or family via their smartphone

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Usage of mobile devices to access financial data is projected to explode

Use of mobile financial services is particularly prevalent among the 10 percent of the population that is underbanked (people with bank accounts but who use check cashers, payday lenders, or payroll cards).According to The Federal Reserve Board’s Survey of Consumers' Use of Mobile Financial Services, “The most common mobile banking activities continue to be reviewing account balances, monitoring recent transactions, or transferring money between accounts.”

According to Blackstone Technology Group’s Financial Services team, nearly 50 percent of tablet owners have performed some level of banking on their tablets, with close to 40 percent of tablet owners having engaged in mobile banking on a consistent monthly basis.”

A 2012 report published by Aite, states that consumers using a mobile device to access their bank account will increase from 33MM to 96MM by 2016. Forrester Research sees that number reaching 108 million by 2017.

Mobile usage projected to triple

in less than 5 years

50% of tablet owners have used it

for banking

Mobile financial services usage is prevalent among the underbanked

Monitoring accounts and transactions, and

transfers are the most common uses of mobile

banking applications

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Despite the proliferation of PFM tools, consumers are still looking for a personal interaction

According to Core Techmonitor, “The basic PFM functionality provided by banks is increasingly unable to satisfy the demands of customers. In addition to a display of their financial data, many customers desire an interpretation of their personal financial situation, whether it’s a comparison with their peer group or financial advice. They expect information on and support in making financial decisions, either through the community or a financial advisor. Equally, they believe their bank should proactively support them in managing their personal finances.” According to MorningstarAdvisor, “Although PFM tools are helpful for tracking spending and budgeting, consumers may realize that they might benefit from a personal relationship with a professional financial advisor for more complicated needs. Many advisors use portfolio management software solutions to deliver account information and performance reports to clients, often through the use of an online client portal, but these tools lack the aggregation of client banking and credit accounts present in PFM apps, and many of the interfaces are not designed with mobile phone access in mind. Also, clients who continue to use PFM apps will receive automated product suggestions that may conflict with the financial objectives outlined by their advisors.”

Three separate sources noted that consumers are still interested in having their financial institutions assume responsibility for personal contact and management of some of their financial issues.

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Understanding PFM Website Usability and Engagement Research from Change Sciences suggests that banks

may have an advantage over startups and software companies (e.g. Mint) when it comes to providing online personal financial management tools. The study showed that the money management offerings of two banks, PNC and Chase, are more trusted by consumers by a wide margin compared to startup and software counterparts. Consumers also report that they are more likely to become users of the money management services of the two banks compared to other services, after interacting with the marketing web sites of the services. The logic is that Bank-oriented PFMs are more likely to gain traction with its customers because they are often the primary institution and a highly trusted source. Banks have a significant incentive to get customers to use its PFMs, because the more engaged a consumer is with a bank, the more likely the are to remain a customer.

The study showed that personal finance sites scored moderately well for usability but fared poorly for engagement as a group compared to other sites in the Experience Cloud. The top two stumbling blocks for personal finance web site users were that there was not enough information and people felt they were required to do too much reading. While these two points may seem contradictory, our qualitative analysis of individual user sessions suggests that it is less about the quantity of reading rather than the quality. This graphic below underscores the finding that there is a higher level of engagement with bank PFMs, despite the fact that independent PFM providers are quite user friendly.

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Marketing/Advertising

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Advertising Trends and Strategies Used by PFM Providers

• Based on a scan of advertisements on Competitrack, very few ads across measured media sources specifically highlighted the PFM tools. However, large banks have promoted their online banking software and PFM tools to a greater degree than independent providers, simply due to their scale and ability to cross-promote other services and support the overall brand, such as Chase’s Blueprint service.

• According to industry segment analysts, much of the marketing and promotion of PFM tools should be conducted via proactive marketing of the service through direct and digital channels.

• Furthermore, targeting specific groups by offering segmented, customized tools based on usage profiles and needs, rather than a one-size-fits-all approach, is being used by many of the providers, via social media, and by offering promotions on other sites where financial management tools might be appreciated, such as the wedding- planning site theknot.com.

• Financial news sites tend to promote their tools and services via content-sharing deals, banner ads, and other electronic promotional tools, rather than via traditional measured media, which is very expensive and doesn’t necessarily provide the necessary ROI required.

• Independent PFM providers did not appear to advertise through measured media channels, instead opting to use affiliate marketing strategies .

• The use of a social media presence (Facebook, LinkedIn, Google+, etc.) was nearly ubiquitous with all types of PFM providers, given the ease of setting up a presence and positive ROI, in terms of generating awareness.

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Emerging Technologies

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Emerging Technologies and Tools

• Several new products, either now on the market or due to launch soon, contain software that encourages users to take action, giving them the value proposition to encourage wider adoption. Merchant deals, debt analysis and savings games are all part of new strategies to give users a more compelling reason to use PFMs.

• Another innovation that is already being heavily promoted is person-to-person payments. American Express Co., MasterCard Inc., Visa Inc. and PayPal all offer ways for their customers to send and receive money using links to various accounts and cards, thereby creating another potential account from which a PFM needs to pull or monitor data.

• New speech-enabled uses and applications for the banking industry are coming to market, and the ability for mobile PFM software to utilize this voice-recognition technology will be key to staying on the cutting edge.

• One of the most intriguing PFM features developers are working on would provide consumers with real-time financial information on their mobile or tablet that would help them with financial decisions at anytime, anywhere.

Personal financial management tools have migrated from desktop-based, private software applications, to Web-based tools hosted in the cloud. However, additional technologies are being used in PFM offerings of today and tomorrow.

• Seven out of 10 wealthy investors either have changed their relationship with an investment provider or reallocated actual investments because of something they read on social media, a 2013 Cogent Research LLC survey released today shows. About 34% of affluent investors specifically use social media such as Facebook, LinkedIn, Twitter and company blogs for personal finance and actual investing, according to the survey, which assessed 4,000 investors with more than $100,000 in investible assets…These Investors also are researching advisers increasingly on social-media sites such as LinkedIn and they are being motivated by things they discover or hear about through social media to contact their advisers, thereby making some sort of social media presence a necessity for PFM offerings.

• According to MobilePaymentsToday, “Account aggregation and personal financial management service Mint has launched a version of its app for Windows Phone 8-based smartphones and for Windows 8.1-based touchscreen desktop PCs and tablets… Mint's app, which is already available for iOS- and Android-based devices, provides live, up-to-date information about users' various accounts as well as bill reminders and budgeting tools.”

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Tools that make personal budgeting simpler are also in development.• Mobile-first financial services company Level’s

first product is an iPhone app that aims to take the hassle out of budgeting for young people,

• The Level Money app, now available in the Apple Store, automatically analyzes users' finances to calculate income, recurring expenses and recommended savings each month. It then calculates how much money users have to spend on a daily, weekly, and monthly basis.

• Every time users make a purchase, the app gauges how much cash they have left to spend that day. The app is targeted at Millennials.

• OnBudget’s app is designed to build customer retention of daily expense prepaid cards by incorporating personal financial management tools that digitize the "envelope budgeting system" popular among consumers.

• Citing studies that indicate that consumers with bank accounts are a growing segment for prepaid card use, OnBudget CEO Jim Collas said, "The No. 1 reason that banked consumers use prepaid cards is to help them budget and control their spending."

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Mapa Research from 2013 offers the following best practices designed to improve usage and engagement.• Seamless integration within regular banking services:

Optional PFM add-ons will not be embraced by a populace that doesn't like budgeting. Instead, functionality should be part of the digital experience.

• Intuitive and pleasing visuals: To appeal to a broad customer base, the PFM tools should be easy to understand and highly visual.

• Segmentation of base: Instead of a one-size-fits-all approach, PFM features should be aligned with different segments of the customer base (mass, affluent, Gen X, Gen Y, investors, etc.)

• Make it social: Allow users to engage with others through social platforms. It was found that this was effective when building and sticking to goals even though the integration of social channels and banking is by no means commonplace in the U.S.

• Provide encouragement: People respond to ongoing encouragement and instant feedback.

• Leverage Big Data: As mentioned by JJ Hornblass as well as reports from Cap Gemini and others, data must be leveraged more effectively to combine overall financial relationships, better understand customer needs and build engagement

"The problem is the lack of data, and the

inability to tell a financial story

beyond just one financial institution. PFM must tell the

full data story. Until it does, only 27

percent of American consumers will find

it "useful". --JJ Hornblass,

publisher of the Bank Innovation

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Will Mobile Finally Make PFM Popular?

In the online desktop era, Mint is the only direct-to-consumer PFM “mega-hit,” with more than 12 million consumers using the service. In contrast, there are actually a number of popular PFM tools on mobile devices; in fact, of the leading 13 free financial tools in the Apple Store, five are personal financial management apps. Mobile is, and will be, a huge driver for specialty PFM apps. It’s not just the mobile platform driving usage, it’s the way that some of the key products have positioned themselves with tangible consumer benefits (e.g., save money by spotting fraud charges) rather than the nebulous (e.g., "manage your spending for a better life").

Some of examples of mobile PFM apps and their positioning are:

• BillGuard is positioned as a fraudulent charge protector and accomplishes that through account monitoring. It appeals to those concerned about losing money to fraudsters and greedy merchants.

• Lemon is positioned around mobile wallets and payments, but it also offers account monitoring as a premium service. It appeals to early adopters wanting to use their smartphone for payments and all things financial.

• Manilla revolves around billing and financial statements, but obviously aggregated bank and credit card statements is a core PFM feature. It appeals to those looking to better manage their mess of paper bills, receipts and records.

• Credit Karma focuses on credit scores and debt management, but recently extended into full account monitoring. It appeals to those wanting to improve their credit scores and better manage debt.

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Innovative Technologies Low income - Done right, personal financial management tools could be especially

useful for low-income Americans, particularly the elderly. These are exactly the types of people who can’t afford to make big money mistakes. MOOLAH is a mobile app specifically aimed to assist lower-income households. By letting users create budgets and recommend related social services and financial products.

Level Debuts Budgeting App for Millennials - Level celebrated the launch of its debut product, an iPhone app that targets Millennials which aims to take the hassle out of budgeting for young people. The Level Money app automatically analyzes users' finances to calculate income, recurring expenses and recommended savings each month. It then calculates how much money users have to spend on a daily, weekly, and monthly basis. Every time users make a purchase, the app gauges how much cash they have left to spend that day.

Japanese PFM Offering Moneytree Headed to the US - Moneytree, a Japanese personal financial management app launched earlier this year, has received $1.6 million in financing led by DG Incubation to bring its app to the US sometime in 2014. Moneytree relies on machine learning and peer data to customize the experience for users. The company’s CEO argues that there is still room for PFM in the world because the best PFM product for mobile has yet to be delivered. The app has been downloaded over 200,000 times and has aggregated data from over 15 million transactions. The service is presently only available in Japan. Budgets, which are a particularly unloved aspect of PFM, are wisely de-emphasized in Moneytree. The app will focus on three things in its US launch: cash flow, debt management and retirement savings. A PFM that is looking to be mobile-first is presumably targeting a younger demographic, to whom “retirement savings” can sound a lot like “purple unicorns.”

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Innovative Technologies Finovera Launches “PFM for your Bills” - Finovera recently launched its

billing/personal financial management (PFM) portal. The service competes in the PFM space, but is more focused on the billing and payments side. Finovera taps into a universal consumer need: organizing, paying and archiving bills that have been paid, which likely will interest a greater number of consumers than services that merely allow users to analyze or chart their spending habits. The free platform aggregates consumers’ bill payments from more than 10,000 billers to provide a single portal through which they can access and pay bills, with features such as payment tracking, reminders, and the ability to view metrics from up to 12 months of historical data, and receive alerts when bills are higher than average.

A Start-Up Aims to Bring Financial Planning to the Masses - LearnVest is seeking to disrupt the traditional model, and bring financial advice to a wider market by making it more affordable. LearnVest, which started in 2009 as a budgeting Web site directed at women, just added $16.5 million in funding from big-time investors – including American Express – to the $25 million it has raised since its founding. The funds will allow it to hire more planners and support staff as well as open a training and adviser hub in Phoenix. Most financial planners focus on wealthier people, whom they can charge $1,000 to $3,000 for a financial plan, or collect 1 percent of their assets, on average, to manage their money. In contrast, LearnVest charges a $399 upfront fee and $19 a month, or $608 annually. The company says it is “ripping a page from Weight Watchers’ playbook” with the most recent version of its service: a seven-step action plan, which begins with a diagnostic call that typically lasts 45 to 90 minutes. Clients then connect all their accounts to LearnVest’s online “money center,” which captures transaction data that is used by the advisor to help formulate a plan to achieve their financial goals.

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Innovative Technologies Yodlee’s Tandem - Personal finance management vendor Yodlee has won numerous

awards for its Tandem product, which is a financial collaboration tool. Tandem is expected to go live in mid-2014 with financial partners, but a preview of the service shows some unique attributes. Tandem is the first app allowing users to establish secure “financial circles” of friends, family, business partners and advisors in which to manage and discuss shared finances. Members of a circle can tag transactions for review, upload important financial information, complete a variety of account transfers and payments, and discuss various items in a shared space. Circle creators determine the level of access other members have to various accounts – for example, a parent could allow their college-age children to request and receive reimbursement for textbooks without direct access to the family bank account. Tandem claims to be ideal for situations requiring secure communication, complex money movement and careful financial planning including:

Caring for elderly family members Communicating with financial advisors Working with small- & micro-business partners Managing a child’s finances, especially in college Planning social engagements like group vacations to birthday dinners Setting budgets with spouses Tracking shared expenses with friends and roommates

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Innovative Technologies – Simple & Moven

Simple and Moven - These companies offer banking apps that combine planning, tracking, and goal-setting with traditional online checking and savings account services. Users of these apps, treat them as they would a bank. Both Moven and Simple are backed by chartered, FDIC-insured banks that hold users’ money and issue the debit cards. “There is a safety and soundness issue,” says Jennifer Tescher, CEO and president of the Center for Financial Services Innovation. “Banks are regulated.” But with the Movens and the Simples, the customer has no relationship with the traditional bank. Google, Facebook, or Apple will eventually offer online banking services as Moven and Simple have done, and these services are sure to be much easier to use and more powerful than what an old school bank can offer.

It is the goal of Moven to leverage the power of the smartphone as the primary payment device and to provide immediate feedback with every user’s spending decision. Moven's PFM)interface called MoneyPulse analyzes spending behavior and provides visual cues (green, yellow and red indicators) to let customers know how they are doing compared to past behaviors. MoneyPath charts a customer's spending over a month's time to allow the customer to understand spending patterns. A unique feature from Moven integrates the MoneyPath financial timeline with a customer's Facebook social timeline allowing a customer to see the impact their social life has on their spending habits (linking a purchase or spending decision with a check-in or status update).

Moven's mission is to encourage customers to be more aware and responsible with their financial behavior without being too judgmental or intrusive. The Moven team has a psychologist, behavior specialist, user experience specialist, designers and experienced banking industry professionals on staff. This combination is behind the unique skill set that Moven believes is needed to develop tools and provide ongoing insight into better personal money management.

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Please don’t hesitate to contact:

Jim KellyResearch Director

ORC International

212-463-6395

[email protected]

mailto:[email protected]

Documents

Personal Financial Management Summary Prepared for: NBCUniversal December 20, 2013