People around the world are radically changing their attitudes towards saving and spending, and alternative financial services sites are reaping the benefits. That was the message from the young founders of Mint, SmartyPig, and Billeo (bill pay and receipt organizing) who all headlined a panel at South By Southwest (SXSW) today.
I've written before about Mint, a free online money management program that is like Quicken for the Facebook set, and SmartyPig, a social savings program that makes saving more approachable with cute cartoon pigs and retailer reward cards, not to mention an industry-leading 3.25% APR. Both reported that the economy's loss has been their gain. Aaron Patzer, Mint's founder, said their sign-up rate has tripled since the downturn last fall, and they just passed their 1 millionth customer and hope to hit 2 or 3 million by the end of the year—they are bigger than all the competitors in their space put together. Mike Ferrari of SmartyPig said their rate of acquisition has gone up five-fold; they've expanded into partnership with a very large Australian bank and are looking at several other markets around the world.
While these companies have been very innovative in making life easier for users (I blogged about how Mint saved me from a fraudulent charge), and making money management seem less intimidating, a lingering question is their business model, specifically their relationship with banks and other primary financial providers. Distrust of the big banks is growing but these Finance 2.0 companies can't really claim to be independent of them. SmartyPig essentially serves as a vendor licensing their service to one bank in each country, while Mint, despite Patzer's anti-bank bravado, depends on revenue derived from lead generation for, you guessed it, banks and credit card companies.
One scenario of truly consumer-friendly banking would be for small community financial institutions and nonprofit credit unions to step it up in the tech area and add these types of tools—the panel took a question from a credit union tech guy who had won awards for his money management. Another alternative is for these companies to assist in helping consumers be "bank-agnostic", mixing and matching their mortgages, savings accounts, and credit depending on who offers the best deal.