For some, counting on a bank to help you avoid overdrafting would be akin to expecting a cigarette company to help curb your nicotine addition. Yet, there’s been a PFM movement to help consumers better understand their personal finances slowly building within the industry for some years now. And with Citibank Inc. deploying more robust features to its online banking site just this week, there’s proof that even the big boys are getting onboard with PFM.

This week, I spent some time with MoneyDesktop Inc, a PFM provider that caters to credit unions and regional banks, and learned more about this metamorphosis. My tour guide, Nathan Gardner, dug into the bank-friend-or-foe debate and argued that not only is PFM important for banks to roll out because it’s the right thing to do for their customers, he also believes that there’s money in it for them. 

“We really see PFM as kind of a reinvention of online banking,” Gardner tells Bank Innovation.

In fact, Gardner encourages banks nationwide to offer more robust PFM functionality so that third-party vendors will not steal away some of their revenue. Sites like Mint.com are competition of sorts to banks, as the service recommends financial products to its users, he tells Bank Innovation. Since smaller institutions or community banks do not typically show up in the available banking deals on Mint’s platform, the site is somewhat of a threat to FIs, he explains. That’s why Gardner believes banks need to serve as the messaging leaders, rather than Mint. Why? If institutions forgo pieces of PFM pie, Gardner believes they will miss out on opportunities to gain clients and/or wallet share of existing account holders. He also argues that deploying PFM functionality will make customers stickier.

“Our ability to provide account aggregation increases the likelihood of loyalty the account holder will stay to the institution,” he says. “We want financial institutions to understand PFM. [We] believe it can be a game changer for them.”

With PFM tied to the future of online banking, Gardner also believes not charging consumers for the service is crucial. In fact, MoneyDesktop requires its customers to offer the service to their consumers for free to elicit greater adoption rates. “We want it to be free to the end user; adoption is that important,” he says. “If an institution is charging for the service, it’s a short-sighted perspective. The amount of adopters would stop them from the data they want.”

That “wanted” data will be coming up in two product releases MoneyDesktop plans to launch by yearend. The new services will put “financial institutions in the driver seat of messaging and understanding who their account members are,” he says.

The first product, called insight, will provide bank execs dashboards that will provide a “clearer look” into their account holder profiles. Additionally, MoneyDesktop will help FIs know what products to market to customers. Perhaps if a consumer has a credit card offer with so and so bank, the bank deploying PFM functionality can outdo the loan’s interest rate and gain more of its customer’s wallet. Additionally, Gardner alerted us an Android version of MoneyDesktop will launch by 2012. Already, MoneyDesktop has an iPhone app available.

“This is the beginning for us,” Gardner says. “Smart deals and the way you improve someone’s financial outlook belong behind the PFM platform. …Our long-term vision is to help people get in touch with their finances.”