Online Financial Management

Online Financial Management (OFM) applications are Web-based tools that allow consumers and businesses to manage their finances in one place, with a single login.

OFM applications are the next step beyond personal financial management (PFM) applications, in that many OFM applications combine small business accounting and management functionality with the consumer-oriented features of PFM products.

Key characteristics

  • Account Aggregation: Ability to view and manage a wide range of financial accounts from thousands of financial institutions — including credit cards, loans, checking, saving, investments, bills, etc. — all in one place.
  • Categorization: Ability to segregate business income and expenses from personal income and expenses, even when one checking account is used for both purposes.
  • Organization: Ability to organize financial data so a consumer or business can see where their money is going. This information can be used within an OFM application to help with automated budgeting, planning for future saving and spending, and other services.
  • Business services: OFM applications targeted at small business owners often include capabilities such as billing and invoicing, processing of credit card and other payments, remote deposits, legal filings, and payroll.
  • Hosted by a financial institution: While some OFM applications are provided on standalone Websites, others are offered by financial institutions and hosted within an online banking session. OFM applications typically may be provided free of charge to consumers or on a subscription basis to businesses.
  • Mobile and social networking features: Integrated features for both consumers and small businesses.

Benefits for financial institutions

For banks and credit unions, the key benefit of providing OFM applications is that OFM users tend to visit the banking Website more often, making it the primary hub of financial management activity. Financial institution Websites that provide OFM capabilities are more “sticky”, i.e., more likely to encourage repeat visits from consumers since 80% prefer to manage their finances within their bank or credit union’s Website. OFM users tend to use more of the financial institution’s services and, for that reason, can be significantly more profitable than the average customer.