Personal Financial Management

Personal finance management (PFM) refers to software that assists users with money management.

Overview

Personal finance management (PFM) references software that assists users with money management tasks. PFM products typically allow users to categorize expenses and add multiple accounts from multiple institutions into a single view. PFM generally also includes data insights and visualizations of spending trends and cash flow. It also may include personal net-worth information.

PFM history

Personal finance management became an industry in 1983, following Scott Cook and Tom Proulx's founding of Intuit. The company was developed during the rise of the personal computer. The pair saw an opportunity to develop personal financial software, which came to be known as Quicken, the company's flagship product. After Quicken became successful, the company launched a second software called QuickBooks for small businesses and financial management.

Around the same time, another company called MECA software released a similar product for PFM called Managing-Your-Money (MYM). It was the idea of MECA software president Gerald Rubin and developed by Andrew Tobias. The software initially ran on the Apple-II and was later adapted for the IBM-PC. In 1990, Microsoft also released a PFM software called Microsoft Money.

In 1997, Microsoft partnered with Intuit and CheckFree to developed Open Financial Exchange (OFX), a program that allowed financial institutions to participate in data-exchanges with web users. This served as a conduit for the development of online PFM software. In 1999, the company Yodlee was founded as a website that allowed users to view email, banking, news, travel, and shopping information all in one place. However, Yodlee shifted to focus exclusively on online banking practices to allow users to view information from all of their financial accounts at once.

In 2000, data aggregation began with the founding of eWise, which allowed users to aggregate account information from the end user's server, allowing access on any device (i.e., tablets, smartphones, etc.) This aggregation differed from the traditional model of the external and cloud-based methods, offering more security and higher levels of data protection while managing money via the Internet.

In 2006, a wave of PFM providers surfaced, including industry front runners Wesabe and Mint. In 2009, Mint was acquired by Intuit for $170M, and in 2010, Wesabe closed due to Mint's ability to automatically aggregate user accounts and transactions, causing Wesabe to lose market traction. In 2008, the PFM industry expanded in scope, with financial advisory companies like LearnVest, CreditKarma, and Personal Capital integrating PFM into their software. Direct banks, like Moven and Simple, did the same. Many PFM companies began to focus on selling software directly to financial institutions; these companies include Meniga, Digital Insight, Geezeo, MX, and Strands, who help banks deliver finance management to small businesses. In 2015, the industry was again disrupted with the uprising of artificial intelligence (AI) by companies like MoneyThor and Personetics. Various large global banks, such as the Royal Bank of Canada and the UK challenger banks Tandem and Metro Bank, use the AI integrations to provide data-backed insights and other convenience features like customer service chatbots.

Timeline

People

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Further reading

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Google Pay redesign puts emphasis on personal finance management

Ida Torres

Web

November 18, 2020

Microsoft, Plaid team up to roll out personal finance app

Web

April 2, 2020

TF Holdings Announces Thinkflow, a New Personal Financial Management Tool

PR Newswire

Web

December 3, 2020

The personal finance management market is growing as banks digitize - Business Insider

Alicia Phaneuf

Web

August 20, 2020

Documentaries, videos and podcasts

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Companies

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References

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