How SKU-level data will take your PFM tools to the next level
Illustration showing SKU-level data and PFM tools from receipt management
People are increasingly watching their money and rethinking how they spend their discretionary income; extra dollars once allocated toward vacations or holidays are now critical for survival.
Personal financial management (PFM) tools are becoming increasingly important in this ‘new normal’ but, while they offer notable value, these tools have limitations. They typically lack the type and depth of data needed to gain a holistic view of customers’ financial situations.
That’s where SKU-level data can help, delivering greater value and enhancing PFM tools with deeper contextual insights. Customers using PFM tools are, on average, 18 percent wealthier than those who don’t; just think about how much further their hard-earned money can go with an optimized version of PFM, helping customers more proactively save and better manage expenses.
It’s time for institutions to offer a next-generation version of PFM — one that uses SKU-level data to boost expense and life management as well.
There is a tremendous amount of untapped knowledge and opportunity in SKU-level data derived from receipts. This data can reveal specific spending patterns and behaviors, brand affinities, hobbies, and unique life stages, allowing institutions to make more informed recommendations and more proactively suggest better ways to save. And, the competition is already on it.
Big techs like Amazon have tapped into this life management proposition, but they have yet to figure out the savings component — this is a significant opportunity for financial institutions to leverage SKU-level data and PFM tools to help customers uncover significant ways to save and manage their everyday expenses.
For example, institutions can surface subscriptions that may no longer be in use—such as magazines or subscription boxes like HelloFresh or FabFitFun—and identify where customers might be able to buy the same thing for less.
Imagine a bank notices that a customer has rented several movies lately through their cable subscription, but those same or similar movies are available on streaming services like Netflix or Hulu for much cheaper. The bank can suggest that customers subscribe to one of those streaming services to watch more movies at a lower cost.
By the way, we just released our newest digital solution: Receipt Extraction API. You can also check out our article to learn more about why we created this API and how our machine learning powered-technology can help businesses extract better data (right down to the SKU-level).
Or, imagine if institutions helped consumers approach how they order goods. Let’s say that by analyzing Mary’s SKU-level data, her credit union could recognize that she purchases milk and eggs every 10 days. With this frequency in mind, the credit union could proactively find the lowest price for milk and eggs for Mary and automatically surface the purchase option. It’s all about putting money back in consumers’ pockets; that’s the key to building relationships and trust.
The fundamental issue with PFM today is that it fails to dive deep enough to truly make an impact on consumers' everyday financial health. Instead, financial wellness tools (like digital receipt and expense management) will experience increased demand as institutions recognize the need to use deeper, contextual data to help customers understand their spend and optimize everyday savings.
Consumers and businesses are looking for every opportunity to save, especially now, and the banks and credit unions that offer effective expense and life management tools can strengthen existing banking relationships while discovering notable cross-sell opportunities.
For institutions already leveraging PFM, receipt management solutions can complement those tools for a more powerful offering that provides meaningful benefits to their end-users. Institutions can capture the 53 percent of consumers who are already using their apps to manage their money by going beyond traditional PFM and incorporating life management tools to deliver more value.
Financial wellness will continue to be a major theme throughout 2020 and into 2021 as consumers rethink their financial lives and lean on their financial institutions to help them through these tough times.