Personal Financial Management
Personal Financial Management is an exploratory project to understand the current (~2019-2020) financial scenario regarding the relationship between Brazilian population and money, and the role of financial institutions in their lives. The output of the project is to identify market opportunities and how to make this relationship with money healthier.
Role
Researcher
Data Analyst
Strategic designer
Introduction
To launch a new digital bank in a very competitive market, it is essential to have differentials. I started this exploratory project dividing it in 3 parts: the relationship between Brazilians and money, a specific company clients scenario and financial institutions analysis. With these three parts, it is possible to identify how financial institutions could create an experience that is relevant to people's financial lives, making a bank a partner and not a weight.
Methodology
For this project I had a lot of previous researches, data, an information from several resources. Under that circumstances, it requested a lot of organisation and focus to filter all the information and list what is missing to enrich the output.
So, considering that context, the methodologies I used are desk research, data analysis, people interview, benchmark and use of personas.
Personal Financial Management ant its importance to the brazilian scenario
Working with UX design, in my opinion, it is essential that our focus is on people's well-being. In the financial world, this point is a little more delicate to work with, due to the structure of banks and to the pre-defined reputation that financial institutions have. But we know that money is a central matter in people's lives and the way we relate to it tells us a lot about values, purpose and culture. The bad relationship with money not only affects the financial part of an individual, but everything even life projects and interpersonal relationships. So, being such a relevant item in people's lives, financial education and a healthy personal financial management should always be present for everyone so that people's lives become easier in many other aspects. With this in mind, financial institutions have an important role for population and have the potential to greatly improve the current situation, and this is exactly where we wanted to explore.
Key insights from the data and heuristic analysis:
Contrast between fares of fintechs (new digital banks) and older banks are high;
The information architecture and the language used in most financial institution make it difficult to understand the product;
And a considerable number os clients who haven’t paid the full amount of the invoices from the last few months. Scenario that worsened with the arrival of the Covid-19 pandemic.
Key insights from my previous research interviews:
2 customers mentioned that banks only want to make money on people;
More financially controlled customers use other tools outside the bank to control expenses;
Lower rates are not the only differential for them to choose a financial institution;
Almost all customers don't know how much interest they pay, or how to compare products and services based on their rates and interest.
Current Financial Institutions
Currently (2020), 5 banks hold more than 80% of Brazil’s total assets. On the other hand, since fintechs started to arise, the number of financial operations carried out in these banks has been decreasing every year. Also, it is notable how these fintechs have been gaining market space and relevance from people's perspective. Having an account in more than one bank, and being a customer of a digital bank is becoming more and more common in Brazil.
In a more competitive market, we needed to understand what each financial institution (banks and non-banks) was doing in terms of personal financial management. For this benchmark we selected 16 financial institutions, which we heuristically analysed them and compared their features related to the subject.
Key insights from the benchmark:
From the 5 largest banks, 2 have some functionalities related to personal financial management;
All the 5 largest banks have complex products/services, information not always easy to understand and high rates and interest;
It is possible to notice that fintechs exploit the large banks gaps, such as communication, product simplification and transparency;
And about personal financial management, most fintechs have features related to it. But the scenario we found was: fintechs that offer banking services, the personal financial management features offered are very simple; and fintechs that don’t offer banking services are the ones whose main product is personal financial management, so they integrate with banking apps.
Conclusion
Looking at all the data and information raised, it is possible to notice a very curious and, at the same time, worrying scenario. Brazil has a population that needs credit and financial institutions to help them to achieve their goals. At the same time, they face a very difficult relationship with money. Many provide financial support to their families and have difficulty in have savings. In addition, most of the population have debts, but don’t know how much interest they pay. And what do banks do to help people's financial health and education? What I found is clearly not enough to considerably change this situation. Actually, it is possible to identify some points of friction, for exemple, the root that is no financial education since school, much of the communication from the largest banks is not easy to understand, products/services are complex requiring great learning effort, many high fees and few features that help predictability and the person's current money management.
Considering that I didn’t find the ideal financial institution, from the interviewees opinion, I gathered opportunities raised, suggestions from interviewees and features that stood out from other financial institutions. My final result was very rich in information and details that brought awareness to companies about a reality that few people have visibility. At the same time, I found a sea of possibilities to help people relate better with money and bring relevance to financial institutions.
