Instead of notifying users about their income and expenses, personal financial management (PFM) tools should provide security against the Coronavirus by showing customers how financially vulnerable they are to sudden change and the actionable steps they can take to mitigate loss.

In theory, PFM tools used by banks and money management apps help users stay on top of their finances. In practice, they make the user do most of the heavy lifting by not converting raw transaction data into useful indicators.

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These indicators will become particularly important as the COVID-19 crisis drags on. With unemployment set to surge across the world and recession looming on the horizon, users will want to know more about their finances than ever before.

Some are already implementing new tools. For example, AI assistant Cleo is working on “caremongering kits”, which it says is a new way to help users stretch money and stay positive. It is also working on a “grant finder” tool to access government benefits related to COVID-19.

Similarly, key fintech figures – including the founders of Fronted and Credit Kudos – have developed Covid Credit, an app that lets self-employed workers prove lost income by combining user testimonials with direct account evidence.

However, PFM providers should consider more in-depth indicators that show the true extent of their finances, such as:

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  • Joint PFM accounts showing household instead of personal finances.
  • How many months of savings users have in reserve.
  • A lifestyle affordability index, taking a customer’s income/expenses ratio and benchmarking it against the user base as a whole.
  • Affordability after losing a portion of regular income.
  • Using categorisation data to separate essential from non-essential spending and identifying where to economise.

Using these indicators will help customers know the full extent of their financial security and let them plan for crisis events by providing actionable insights, such as if they’re living above their means and where to cut expenses.