How Personal Financial Management Solutions Might Reshape Consumer Access to Mortgage Lending

by Chuck Walker, Vice President, Single-Family Digital Alliances and Distribution and Mark Fisher, Senior Director, Digital Product Development

Over the past few years, digital personal financial management solutions (PFMs) have come a long way — from simple checkbook balancing tools to a full-scale suite of solutions that help with financial education, money management, budgeting, tracking, and monitoring overall financial health. A significant new development in the personal financial management market is the convergence of consumer credit management with money management solutions.

The rapidly evolving FinTech ecosystem seeks to create next-generation platforms that move beyond data aggregation toward a financial control tower for consumers, giving them the ability to seek advice and take action, such as sharing data with lenders in previously unseen ways. Part of this evolution is an opportunity to provide mortgage education, support affordable housing, and enable more borrowers to pre-qualify for mortgages and better understand their options.

A significant new development in the personal financial management market is the convergence of consumer credit management with money management solutions.

Both consumers and lenders are likely to benefit from PFM solutions. Mortgage borrowers can access information that will help them better understand their mortgage options and their finances. Meanwhile, data received from PFM providers can potentially provide mortgage lenders with the ability to improve their targeted marketing, reduce data entry, and automate pre-approval processes. For those consumers who are not ready for homeownership, PFM providers can play a key role in borrower education and counseling as well as financial planning.

Of utmost concern when engaging with PFMs, however, is protection of consumer non-public information and privacy. Financial institutions must consider privacy laws and the growing consumer demand for transparency in data collection and practices regarding ongoing use and refresh of data. Lenders must consider their approach to data privacy and protecting consumers, the disclosure of use of third-party data aggregators and their privacy policies, and disparities in access to technology.

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