Data norms needed in personal finance space

17th November 2010

Do we need policy and procedural changes at the institutional level to facilitate personal finance management? Pose this question to V. R. Govindarajan (Govi), Director, Perfios Software Solutions Pvt Ltd, Bangalore ( >http://bit.ly/F4TPerfios), and the answer you get is a resounding ‘yes.’

One of the reasons for not finding too many automated tools in personal finance is that we (end users) do not get information in a standard format from financial institutions, says Govi, during a recent interaction with Business Line. If transaction information can be provided in some standard format (such as OFX or Open Financial Exchange), then it would be relatively easy for people to keep track of their transactions in an automated way, he suggests.

“Also, in asset classes such as mutual funds (MFs), and equity, each institution uses its own names for schemes/ scrips. Although there are standard BSE/NSE/ISIN codes or AMFI codes (in the case of MF), broking houses, securities houses, and financial institutions (providers of PMS or portfolio management services) use their own code/ name and thus it becomes difficult for an individual to consolidate data from multiple institutions in an automated way. So, some standardisation across transaction reporting would help.”

Govi – who has an MS in Computer Science from the University of Massachusetts, Amherst, and a BE in Electrical and Electronics from the Indian Institute of Science, Bangalore – has worked in the database technology area with Digital Equipment Corporation (DEC) and IBM, and was a co-founder, CTO and member of the board at Aztecsoft. In Perfios, which he has co-founded, the goal is for ‘an innovative personal finance software application to manage personal finance in a safe and trusted environment and help users analyse and understand their personal finance in a simple, easy and secure way.’

Our conversation continues over the email.

Excerpts from the interview. Does personal finance get the focus it merits, at the individual level?

As in any other situation, every individual wants to be organised, disciplined and do the best. However, in the case of personal finance, as the available state-of-the-art tools are quite primitive (spreadsheet is the primary tool available), it is not easy to monitor and track finances.

The activity is no fun; it is laborious, time-consuming, and error-prone. Hence most individuals give up after a while. So, lack of good automated tools is the primary reason that personal finance is not getting the required attention at the individual level. However, every individual wants to monitor, track and analyse his/ her finances provided he/ she need not have to spend too much time on that activity.

There are a few finance sub-portals offered as part of larger portals. Your views on their performance.

A good solution should provide a 360-degree view of one’s personal finance (across all asset classes), and that too in an automated way (without significant manual intervention). Most of the personal finance solutions offered in the market, in India today, fail both these criteria.

These solutions address only a subset of asset classes (mutual funds and equity being the common ones). And all of them require significant manual intervention – one has to input all transactions and data. In some situations, these sub-portals can access transactions done through the portal, but all other data have to be entered manually.

Most of these portals are designed as financial content portals and so their focus is on content and not so much on the software solution. To that extent, they do act as good sources of financial content. However, they do not play the role of a comprehensive personal finance software solution. In a way, these solutions act like glorified spreadsheets (with their user interface, instead of a spreadsheet interface).

Any other points of interest.

A typical personal finance solution should not only be a simple book-keeping application. Because, for an individual, personal finance involves the following activities in a (forever) loop:

* Financial planning (with medium- and long-term goals and objectives).

* Execution of these plans.

* Monitoring, analysing and course-correcting to meet the set objectives.

* Income-tax planning, preparation, filing (with traceability for income-tax scrutiny/ audit).

Ideally, a personal finance solution should provide support for all these activities so that the solution becomes a one-stop for one’s personal finance needs.

safe and secure

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