Digital Banking

Can Money Management Tools Bring Consumers Back From The Financial Edge?

Are money management solutions able to help consumers avoid financial disaster? For the February Digital Banking Tracker™, PYMNTS interviewed Kevin Kirn, head of product for Mint, about how tools aimed at simplifying banking are also changing consumer attitudes. Plus, all the latest digital banking trends and a directory of 148 providers from the digital banking ecosystem inside this month’s Tracker.

What’s the most effective way to remind yourself that a bill’s due date is approaching?

A Post-it note? An app alert? A piece of string tied around a finger?

These days, consumers have plenty of options to create reminders to help them stay on top of things. Some options, like the Post-it note and the string, fall on the more primitive side of the scale, while the more tech-savvy consumers are more likely to rely on a smart device to help them remember important due dates and tasks.

But managing various financial assets can be demanding, even with the latest and greatest tools available. For some consumers, keeping track of various credit cards, financial investments, utilities, loans and other accounts can be tricky to manage. Even if the most responsible consumer forgets to pay a bill, the oversight can reflect negatively on the consumer’s credit score.

In order to help consumers manage their accounts and avoid blemished records, some digital financial management solutions providers feature consolidation services that gather various bills into a single platform. One such offering, Mint, aims to help users develop good financial habits by offering a series of tools that help consumers set budgets, track bills and monitor credit scores. The company also added a bill pay feature to its platform late last year to allow consumers to deliver payments to their various accounts.

As companies roll out new tools for consumers to consolidate their financial accounts, consumer attitudes to digital banking are also changing. For February’s Digital Banking Tracker ™ feature story, PYMNTS spoke with Kevin Kirn, Mint’s head of product, about how money management tools and greater automation are making it easier for consumers to develop smart financial habits. Kirn discussed how these tools are streamlining the consumer experience and are changing consumer attitudes about digital banking practices.

Breaking bad financial habits

Financial money management companies like Mint offer consumers a series of tools to help stay on top of their finances. But Kirn said the solution that is most popular with users is one that offers a simpler way to manage their finances.

“Something we hear very consistently is that [the solution] is the only place that has all of my finances in one spot,” he said. “So many people get so many things out of it, but that seems to be the one thing binds almost all of our avid users together.”

Kirn, who also described himself as an “avid Mint user,” said these consolidation solutions have transformed the banking industry by offering a simpler platform for consumers to watch their finances. In addition to solutions that allow users to create a budget, label transactions and track their credit scores, Mint released a new bill pay service late last year that allows users to send payments to their various accounts.

According to Mint, roughly 25 percent of Americans miss a bill payment, which can result in plenty of financial headaches, including a damaged credit score. These overdue bills can add up to $77 billion annually in late fees and higher interest payments. Kirn said the bill pay feature adds a new service to Mint’s solution suite that enables users to take steps based on the platform’s suggestion.

Over the next few months, Kirn said the company will focus on using the new bill pay feature to help users pay their credit card bills on time. Kirn said the bill pay feature will provide insights and allow the company to “go deep” in order to help prevent people from missing their credit card bills.

“They’re the most painful bills by far,” said Kirn. “But if you miss one credit card bill, it can start a financial spiral for anybody who’s living close to the edge financially.”

By adding bill pay, Kirn believes financial management solutions providers could potentially shield millions of consumers from the consequences of missing a credit card bill.

“If we can prevent a bunch of those from happening, we think we can really help improve some financial lives,” said Kirn.

Kirn said money management solutions like bill pay are also changing the way consumers interact with their financial data. With solutions like bill pay in place, consumers are gaining access to and understanding of their own financial data and finding ways they can act on this information. These changes are also altering the mission of financial management solutions providers like his company.

“We’re going from being pure insight to being insight coupled with this specific action the user can take, which is very, very exciting,” Kirn said. “We think we’re going to be able to impact a lot more people’s financial lives in a very positive way.”

Seeking simpler solutions

Kirn said that, before money management solutions hit the market, consumers were reluctant to keep their money in more than one place. Without a solution to oversee all their accounts, Kirn said consumers were inclined to consolidate their finances.

However, he now sees consumers becoming more comfortable with having money in more than one place because of the greater availability of money management tools. The “all-in-one” solution makes it easier for consumers to keep track of their assets.

“We continue to see the number of accounts that people connect go up over time,” Kirn said. “That’s potentially one impact the all-in-one [solution] is having on the overall industry is that people are more comfortable having things in more places because they know that [these tools are] going to bring it all together for them.”

He said consumers not only want to be responsible for their finances — they also want to understand them. But at the same time, Kirn said the stress of trying to understand their finances can be overwhelming. Financial management solutions that offer all-in-one solutions aim to alleviate some of that stress, he said.

Looking ahead, Kirn anticipates the banking industry will change further by integrating more products to make financial management simpler. He predicts solutions like robo-investing, such as Fidelity Go or E-Trade Adaptive Portfolio, will play a larger role in consumers’ financial management.

“I think we’re going to see it start to spread into the broader consumer financial space where things are going to go from high maintenance, high stress to fully automated,” he said.

At the end of the day, Kirn said the goal of these solutions is to make managing money simpler for consumers to help them take the necessary steps toward financial freedom.

“Ultimately, we just want to take the problem of managing one’s bills completely out of our customers’ hands and put that on automatic,” he said.

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About The Tracker

The PYMNTS Digital Banking Tracker™ brings you the latest news, research and expert commentary from the FinTech and consumer banking space, along with the rankings of 148 companies serving or powering the digital banking sector.

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