When the financial sector took a dive this fall, the entrepreneurs behind a new batch of personal finance sites worried that they were in the wrong place at the wrong time. After all, if people no longer trusted their banks, why would they trust some start-up with their most private financial information?
As it turns out, interest in these sites is up, not down. Burned by their banks and the stock market, people seeking help with budgeting, saving and investing are turning to sites with names such as Mint (not associated with HT Media Ltd’s Mint newspaper), SmartyPig, Cake Financial, Wesabe and Credit Karma. Visits to online personal finance sites are up threefold over the past year, says Jim Bruene, founder of trade publisher Online Financial Innovations, and many of the sites say they have grown quickly since the crisis worsened in September.
Mint, which tracks users’ financial accounts and creates budgets, has 630,000 registered users, a quarter of whom have joined since the fall. “The worse the news was, the more people started using Mint,” said Aaron Patzer, founder and chief executive of the company, which is based in Mountain View, California. “People realize they need to get a better handle on their money.”
Sites such as Mint, Wesabe and Quicken Online pull financial information from the accounts of users and analyse it with graphs showing, say, how much money they spend in restaurants compared with how much they are saving for retirement. On social investing sites, including Cake Financial, Inner8 and Covestor, people rely on other members for investment tips. Other sites solve narrower pieces of the financial puzzle. PearBudget walks users through creating a budget with an online spreadsheet application. Credit Karma lets people check their credit scores free as often as they want, and track and discuss their progress in improving them. On SmartyPig, users share savings goals with friends, and the site withdraws money from their checking account each month.
The sites use security measures such as encryption and are certified by Web security firms. But Mint users who want the site to consolidate information from their online banking and investment accounts must entrust it with their passwords. Other sites involve frank discussions of one’s net worth and debts (anonymity too is allowed).
To encourage return visits, Mint is unveiling a new feature in March that grades the financial fitness of users in 12 categories, such as late payment fees on credit cards and retirement savings.
Venture capitalists are betting millions on the notion that financial help on the Web can be profitable. Mint has raised $17 million (about Rs83 crore) from Benchmark Capital and angel investor Ron Conway, among others. Conway also invested in Cake Financial. Wesabe has raised $4.7 million from a group including Union Square Ventures and Tim O'Reilly, the technology publisher. Many of these sites earn some money through advertisements from financial firms. An October report from the research firm Forrester predicted that despite the recession, spending on Web marketing by financial institutions would double by 2012.
Personal finance websites are almost as old as the Web. Banks began offering their customers online banking a decade ago, and the dot-com bubble brought successes such as Financial Engines and failures such as MyCFO and Mortgage.com.
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