Managing personal finances probably isn’t on the top-ten list of weekend activities for most consumers. But free personal finance manager (PFM) sites like Mint and LearnVest make it easier—and try to make it fun.
For those unfamiliar, PFM sites are marketed as “dashboards,” and feature easily readable graphs that show where the users' money goes. They catalog purchases from rent or mortgage to a bar tab, so that users can create monthly budgets and flag tax-deductible expenses. Mint provides money-saving alerts and free advice like: “You got hit with a finance charge!” or “We’ve found the best credit cards for you.” While LearnVest, which targets women especially, offers free online “boot camp” classes. The list goes on.
While consumers like seeing all their finances in one friendly place, they don't like the fact that they can't do anything about it there—namely pay those bills or move money between accounts—using the same site or app. That capability is gradually coming, with the help of new finance technology, business models and willing, often smaller, banks.
What’s been the holdup so far?
Traditionally, big banks have been reluctant to hand over control of any kind to other sites or service providers when it comes to technology that's customer-facing. A financial services strategist with consumer-research firm Iconoculture, Greg Archibald, explained: “[Banks] want to keep as much of that [customer] relationship as they can. They want you to open more accounts and use their products.”
To keep customers close, banks have been building in-house PFMs, which have their own shortcomings. In most cases, consumers can do whatever they want with their money, as long as it’s in that bank. Take PNC Bank’s Virtual Wallet. It has a slick, user-friendly design, but Virtual Wallet doesn’t allow customers, for example, to see the balance and transactions on a credit card from any other bank.
A survey by Javelin Strategy & Research last March showed that consumers prefer online to other payment methods by two to one. “Whether it’s at a biller site or a bank site is a different question,” said Javelin analyst Mark Schwanhausser. When the firm asked consumers last year about their bank’s website and about dashboard sites like Mint, more than twice as many said they felt safer logging into their own bank.
Still, all-in-one control is on the demand-list for the growing segment of consumers who use PFMs. Mint alone has 6 million users. One of 56 comments in the discussion “Can I pay bills with Mint?” via the company's online forum spoke for the crowd: “PLEASE MINT>>>LET US PAY OUR BILLS HERE!”
To help the banking side of the business keep their customers happy, BancVue (one of Fast Company's 2011 Most Innovative Companies in Finance) is planning to release a product called Kasasa 360 that lets smaller banks grant customers total access to view and pay bills for all their accounts through one dashboard. BancVue's Kasasa brand already provides checking and savings account technology and services to about 60 community banks and credit unions, with names like Farmers Citizens Bank (in Ohio).
On the software side of the business, smaller personal finance management sites are starting to integrate payment technology and new business models. Today, Manilla, which launched in June, is a single place for consumers to view all their online bills. The company has confirmed that the ability to bill pay those bills via Manilla is coming—but they're not saying when. Partners of Manilla, such as Citibank, have not yet confirmed that they will participate. They're worth watching.
Simplee, which also debuted in June, may beat Manilla to the punch with an approach that won't require banks' participation. Simplee focuses on helping users manage their health care expenses, and will allow customers to pay any and all doctor bills directly—by detouring around the bank roadblock—before the end of 2011. “If I had to integrate with banks, it would take me years,” said Simplee’s CEO and cofounder, Tomer Shoval.
Instead, Simplee plans to pass payments through a third-party processor. Shoval likens it to buying products on Amazon or eBay. The credit cards are charged to these big e-commerce companies, who then send payments to their member merchants. Simplee will do the same by processing charges and then paying the providers on behalf of patients. Simplee can pay doctors with whom it doesn’t have a relationship this way by just cutting a check.
LearnVest claims no intention of adding the ability to sling money around. Founder and CEO Alexa von Tobel describes that as a plus because they offer members “a complete and secure window into their financial picture without the worry of moving money or executing a trade.”
Mint is pretty tight-lipped about offering bill payment. “We don’t do it today, and it’s something we might consider in the future,” said Aaron Forth, general manager of the Personal Finance Group at Mint’s parent company, Intuit.
With its acquisition by Intuit in 2009, Mint is perhaps best equipped to offer a full, personal finance management and bill-paying system. Intuit, in fact, has provided that for years—through its Quicken Bill Pay service. Anyone could sign up for it now, and pay a $10 monthly fee. But the older service just doesn’t have the mainstream appeal of the newer, free online finance managers, said Javelin’s Schwanhausser. “It’s not the mass consumer market. I don’t see it as a big a threat to financial institutions.”
Finally, there’s Yodlee MoneyCenter. If people even know the name Yodlee, it’s probably as the back-end data-processing service for many big banks and that formerly powered Mint (before the Intuit purchase).
Yodlee’s mission is to serve other companies, not consumers directly—unless they want to be guinea pigs. Since 2002, Yodlee’s had something like a secret website called MoneyCenter that it describes as a “sandbox” for trying out new technologies. Consumers who stumble across MoneyCenter (it’s never been advertised) can in fact get a Mint-like organizing and analysis experience, plus the ability to move money around. But it's not as highly designed as Mint's, and again not advertised.
If mainstream consumers want to manage their money online, it will be at sites that are screaming for attention, like Mint, Manilla, and LearnVest. Despite the cautious words from independent financial sites and from banks, Schwanhausser thinks that mainstream, one-stop finance and payment sites are inevitable. "It's an evolutionary thing," he said. Yodlee's MoneyCenter "sandbox," Manilla's promise, Simplee's no-banks-required approach, and new products like BancVue's Kasasa suggest that moment is nigh.
[Image: Flickr user cdwaldi]