CHICAGO — When there’s a market for a reality show, you know there’s an underlying societal problem.

When I became aware of the existence of the reality show The Fairy Job Mother, which helps struggling Americans find jobs, it really hit home just how much financial help consumers need.

It didn’t occur to me then, though, how banks could help consumers with this issue. After sitting in a session yesterday at Net.Finance, it became obvious that banks could help consumers find their financial way through personal financial management (PFM) tools. That is, if banks choose to do so.

Though the motivation to help consumers better their finances — rather than charge them fees for poor planning, etc. — may command a low priority, regulators are pushing lenders to show consumers how they can do financially better, and PFM is one way to execute on D.C.’s orders.

At least that was one battle cry from Mark Schwanhausser, multi-channel financial services research analyst at Javelin Strategy & Research, during a presentation. In his research, one trend surfaced that particularly disturbed him: There’s a healthy portion of consumers who don’t manage their money. PFM, Schwanhausser said, is one tool banks can use to empower consumers to take control over their finances, and remedy the deficiency.

“Consumers are overwhelmed and don’t know where to start,” he said.

Beyond engendering goodwill, there’s money to be made by banks in the deployments.

“There is ROI for PFM,” said Schwanhausser, explaining that the ROI comes from things like paper reduction, customer retention, fraud prevention, cross-selling, and deeper relationships with consumers. 

But in order to work effectively, PFM must be redefined to be meaningful.

“The problem with PFM is it is treated like a stepchild,” he said. Providing financial data in real time and offering easy categorization are two keys to PFM effectively working for banks and consumers alike.

And banks better make a PFM play soon because startups are claiming they can do better, Schwanhausser said. If banks don’t make a move on it, the Mints of the world will win. Why? Once consumers shift to depending on services like Mint, he cautioned the difficultly banks will have in regaining that population. We would add that that is especially true once Mint, for example, adds bill payment capabilities, which we expect will happen eventually.

Nevertheless, banks are strongly positioned today to capitalize on the power of PFM.

“You guys are in the ideal spot,” he said. Why? Who better to turn to manage your finances than the one you bank with?