OFM — Online Financial Management — applications are the next step beyond PFM (personal financial management) programs. For community and mid-market banks and credit unions trying to compete with top-5 national institutions, offering an OFM application on their online banking site can be a huge differentiator. According to Digital Insight’s 2nd Annual Online Financial Management survey, 80% of consumers want to manage their own finances online with their financial institution, an increase from 68% in 2008.
At Digital Insight, we define OFM as applications that expand the PFM concept to also include programs for small business owners such as invoicing, payroll, and preparation of legal forms. This is particularly attractive to the nearly 23 million US small businesses that have less than 5 employees and to the 41% of Americans who run a small business in addition to their main job.
For consumers and small business owners, the key attractions of OFM include aggregation — the ability to manage all their finances and many of their business functions on one Web site with one log in — as well as greater control of their finances with planning and budget management features, and the security of using a site hosted by their financial institution.
In our research with our own OFM products, FinanceWorksTM and Small Business FinanceWorksTM, we’ve seen nearly 80% of FW users say the product has made them more likely to stay with their bank or credit union and recommend it to others. FinanceWorks users are 4x more profitable than the average customer, and they hold 30% more outstanding loans. So we view OFM offerings as delivering a significant competitive advantage, especially for mid-market financial institutions trying to compete with huge national firms.
We’re interested in the community’s thoughts on this subject and what your experiences with OFM, if any, have been. For those that offer OFM products to their customers, what are the trends you're seeing? What motivated you to offer these products? If you’re not offering OFM, are you considering it? If so, how is the evaluation process going? At the BAI Retail Delivery conference? Stop by booth #801 to learn more or visit ofm.financeworks.com.