The Featurization of PFM: Why Citi Won’t Steal Customers With Its Mobile PFM App

According to a press release from Citibank:

"Citi will launch new mobile capabilities on the Citi Mobile App® for iPhone to include seamless in-app account opening, a 360-degree view across all financial accounts and spending insights to enhance clients’ financial wellness. In addition, the app will offer a first-of-its kind among banks—non-Citi clients can create a profile and connect their accounts across financial services providers to benefit from the app’s account aggregation, spending insights and bill management features."

Supporting Citi's decision to build a digital-first app were the results of a consumer survey that found:

  • 87% of consumers trust banks more than non-banks when it comes to handling their finances
  • 87% want a snapshot of their entire financial life in one place
  • 79% prefer a single app to manage their finances instead of relying on several specialty mobile apps

The bank's Global Consumer Bank CEO said, "Over the past few years, we have been transforming our U.S. Retail Bank into a growth engine in our core markets while developing new mobile banking capabilities as a platform to one day serve consumers nationwide. That day is here.”

This is an interesting move on Citi's part, but its efforts to get non-customers to create profiles and connect their accounts to the megabank's app will fail. Citi is misinterpreting consumer behavior, and failing to understand the direction that PFM is taking.

It's understandable why Citi is doing what it's doing, however. Claims that the retail bank is a "growth engine" may be true in some respects, but Citi lags the other megabanks in deposit growth.


Citi also has some catching up to do, on a national basis, in terms of consumer purchase consideration. In a recent survey I conducted, respondents were asked: "If you were looking for a new checking account, of the following FIs (or type of FI) which would you be most likely to choose from (select up to 3)." Across each of the generational segments, Citi lags the other megabanks:

If Account Aggregation is the Answer, What Was the Question?

It's great that nine out of 10 consumers might want a snapshot of their entire financial life in one place, and that eight in 10 say they would prefer to use a single app to manage their finances instead of relying on several specialty mobile apps. I'm sure 99.9% of people want peace on earth and to end world hunger--but that doesn't mean they're actually going to do anything about it.

And that's been the problem with PFM and account aggregation--people express interest in these capabilities, but their actual behaviors don't align with their attitudes and intentions.

In fact, when we asked consumers what features or factors would be most important to them if they were in the market for a checking account, just 16% of Millennials--and fewer Gen Xers and Boomers--mentioned "tools to help manage financial life" as an important factor.

If the PFM capabilities that Citi touts as being able to help attract non-customers--i.e., account aggregation, spending insights, and bill management features--were that important to someone, wouldn't they already be banking with a provider that offered those capabilities?

The Featurization of PFM

Citi's strategy fails to understand the longer-term trend in PFM:

The days of the big-honking, throw-every-feature-into-the-kitchen-sink approach to apps and solution development are behind us.

Eight in 10 consumers might say they would prefer to use a single app to manage their finances instead of relying on several specialty mobile apps--but that's not what they do. The reason they don't do that is because few consumers  want all the features that the big-honking PFM apps purport to offer.

Consumers don't need to register for and connect to a PFM app like Citi's to take advantage of spending insight or bill management capabilities. They can find a tool they like, and through APIs, that tool can connect to their existing providers and data.

In other words, consumers want--and can have--PFM features, not solutions.

If someone wants to maximize their savings, there are a number of apps in the market that can help them do that. If they start using one, but after some time, find another one they like better, they can stop using one and start using another one.

Can't do that with most (all?) banks' PFM offerings, however. The ability to mix and match--or plug and play--isn't there.

If Ciit's mobile PFM app becomes a true platform, however--where third-party PFM feature developers can seamlessly plug in--then I can see Citi's non-customer strategy succeeding. But not until that happens.

Ron Shevlin
Director of Research
Cornerstone Advisors