A few months ago Adena DeMonte, a freelance writer living in California, read a blog post about Geezeo and Wesabe, two personal finance sites with a social networking spin, and immediately signed up for both. Then she discovered Mint, a newer site that offers similar budgeting tools but less socializing, and ditched the others. And then she stumbled upon Yodlee, which has even more financial tools, and ditched Mint. "I'm going to stick with that," she says.
The explosion of personal financial management sites and communities like Geezeo and Mint is helping people relate to money in new ways. Many sites are similar to established personal financial management tools like Quicken—they display information from multiple accounts on one screen and provide nifty budgeting tools—while the social networks let members snoop on one another's investments, cheer one another on to meet goals or trade messages about money.
For now, these sites tend to attract the Facebook generation: recent college grads, heavy debit card users and anyone looking for some free advice. Mashable.com, a social networking blog, lists more than 40 of these sites, many of which have been launched in the last year. Even more are in the works: Vault Street, an online financial document manager, is set to launch any day now. Altogether, the sites are tracking billions of dollars for several hundred thousand users.
With an estimated 65 million people banking online, the growth potential is huge. Right now the sites support themselves with a mix of venture capital, ads and commissions. Given that many offer similar services, usually for nothing, the sites' challenge will be standing out and creating customer loyalty. As DeMonte, who has sampled many of them, says, "They're all trying to do the same thing, from what I can tell." Mint, Yodlee, Buxfer and Expensr all track transactions and feature a spiffy pie chart for monitoring expenses. Geezeo and Wesabe feature discussion groups about topics like buying a house or getting out of debt.
Ram Shriram is a "mentor capitalist" with a knack for recognizing potential. He helped expand Amazon's customer base in the late 1990s and was a founding board member at Google. Now he's backing Mint with early financing. He fell for the site's friendly interface and simplicity. "The Internet tends toward winner-takes-all," he says. "Of the 40 sites, users will pick one or two."
It's critical to attract people when they're young—and then grow up with them, says Don Dodge, a blogger and start-up expert who works for Microsoft. As people's financial profiles change and require different services, sites will need to be malleable. John Keeling, a senior vice president at the Motley Fool, the investment advisory services company, says the most successful sites might generate unique and relevant content, offer members discounts or deals, build bustling communities, partner with banks or recognized brands. Geezeo, for example, partners with the Motley Fool for stock ratings; Yodlee tracks more than just bank and credit accounts—it lets you monitor airline miles, rewards points, investments, virtually any account with a login and password. The sites ask for user names and passwords to display information from multiple accounts and provide budgeting tools or social networking features. All say they use encryption and strict security protocols. The problem, says Jim Bruene, publisher of the Online Banking Report, is that Internet security isn't fundamentally better now than it was 10 years ago.
For now, young online consumers don't seem worried. Nita Singh, a 26-year-old product manager for Yahoo, says she's saved about $400 per month thanks to Mint, since she started eating at home more and changed one account to get a better interest rate. "Mint is easy, and you're able to access it on the go. And it's free." That's a formula that's going to make money not just for her but for the sites.