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Personal Financial Management in the PDS2 era

Managing your personal finances has always been a challenge for many. And the advent of savings and investment solutions, as well as the multitude of payment solutions, all of which are purely digital, have only made it more complicated by providing more and more people with a growing choice of financial solutions and options.

Personal Financial Management: what it is and what is needed 

With this proliferation of widely accessible financial instruments, the management software has also evolved. Specifically, the software that aims to improve the understanding and subsequent management of the finances of individual savers is called Personal Finance Management, or PFM for short.

At first PFMs were websites accessible online, but in recent times they have gradually become mobile with the expansion of smartphones. Their operation initially required the user, i.e. the saver, to manually enter data and numbers and retrieve them from direct sources (account statements, etc.). With the standardization of files, PFMs then evolved allowing direct file uploads: the user could download statements in a format and upload them to the application, which was able to take the data and organize them logically.

How PFM changes with the PSD2 and why 

With the advent of Open Finance, and the regulatory approach in Europe through PSD2, financial service providers, such as banks and funds, have found a standard to share data in a safer, more accurate and faster way, giving impetus to all those solutions that, wanting to re-process data, but requiring constant manual intervention, ran into many problems.

With the PSD2 there is therefore a further automation: the user saver will no longer have to manually load data periodically to get the assistance required by software, but will be able, through an appropriate management of digital consent, “connect” the different services to financial data sources, giving the software the possibility to import, arrange, and re-process data in a fully automated way.

The PSD2, moreover, has had an impact on data access that obliges all providers on the same level. In this way, therefore, it is possible to build links between different software and to different banks. So a saver user will be able, through the savings management app alone, to connect his current accounts from all the banks in which he has open positions.

Fabrick’s PFM

Fabrick’s PFM starts from this new reality and has been designed as a modular solution of three fundamental blocks: data enrichment, dynamic savings schemes and an advanced categorization analytical engine. 

Categorization is a fundamental element in a world where there are many different and complex data sources. Fabrick’s PFM module for categorization was “trained” for several months before it was launched on the market, where it continued to improve exponentially in classifying and sorting identical individual data points from different arrangements (i.e. reporting a unique entry where a reading of the individual data could lead to thinking of two different entries).

Thanks to categorization it is then possible to enrich the data by cross-referencing them with different databases, from geolocation to indexing, to highlight or find trends and consumption patterns not always clearly visible. Trends and patterns that, if combined with the third module, can put in the field dynamic savings solutions (such as rounding of expenses with provisioning of the difference) that can stimulate virtuous attitudes and more easily satisfy the user’s desire to save (and without excessive effort).

That’s why Fabrick’s PFM is targeted at users of PSD2 solutions, such as banks and FinTech, who seek to deliver a superior user experience by leveraging data to build insight and improve customer retention. PFM is a key service for those companies that see automation as a way to build tailor-made solutions for a broad customer base.

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