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Personal financial management sites for years have helped consumers get smarter about saving money. Now they're helping them get smarter about going into debt.
March 24 -
Intuit's latest online banking software eliminates the integration issues of its 2008 design, finally delivering what the company says is a seamless experience.
March 17 -
Banks typically pitch personal financial management tools as a way to analyze past spending. A new approach flips that around to help consumers control future spending.
February 10 -
New data from personal financial management tools can garble the feeds banks provide to third-party PFM companies, giving consumers an inaccurate view of their overall finances.
January 7 -
Banks are taking greater control of the personal financial management market as the third-party vendors that defined the space increasingly find they must work with banks to survive.
January 3 -
There are plenty of companies now with tools that let people slice and dice their own financial data, but the updated Bundle application set to go live Friday will also let users compare their own spending habits against their peers'.
August 25
Many third-party personal financial management providers make money through indiscriminate product offers, but Payoff has a different approach — it plans to pitch products only from banks where consumers already have a relationship.
The promise of PFM is that it helps consumers better handle their finances, and sometimes this means moving them to a new product, such as a credit card with a lower interest rate. The PFM provider gets a fee for referring a new customer for that product, and some have found that this raises a conflict of interest when the provider seeks to partner with banks.
Payoff.com LLC, of Los Angeles, launched in January and so far has 3,000 customers. It has one unnamed financial services partner, with a million credit card accounts, that may someday advertise on its platform. Payoff's twist on the PFM model is that it allows users to treat finances as a game, competing on Facebook and Twitter as they aim for certain financial goals. As customers approach their goals, they win badges and are eligible for small cash prizes.
"If we can embrace people's existing bank relationships, we can allow financial institutions to participate with the system of badges, rewards and offers through our platform," said Scott Saunders, Payoff's founder and chief executive.
Saunders said that banks would be more likely to participate if they knew that their competitors' products were not being pitched. Payoff, which exits beta testing next month, is also seeking deeper merchant involvement, which Saunders said would encourage consumers to increase their level of participation by building on the trust they already have with those companies.
Analysts said, however, that Payoff is limiting its potential universe of customers and merchants.
The number of people who budget and plan aggressively and who set goals and work toward achieving them probably total no more than 15% of the population, experts said. Merchants who want to reward this subset are also a limited group.
"The challenge will be to find and sign up that segment of consumers" for whom such things matter, said Ron Shevlin, a senior analyst at Aite Group LLC of Boston. "This is not a mass market."
But while many banks are looking into hosting PFM tools to help consumers, few want to send their customers to a third party's website, said Wayne Cutler, co-founder and partner of Novantas LLC.
"The big issue is that the banks see they are being disintermediated by PFM companies," Cutler said.
Other analysts agreed.
"If the banks are going to start to find ways to offer rewards based on a transaction stream, will they want to make offers through a third party?" said Jacob Jegher, a senior analyst at the market research firm Celent.
Geezeo Inc. of Tolland, Conn., once generated revenue by offering a PFM site that hosted ads and account referrals. It decided to stop offering referrals altogether when it began selling its platform directly to banks in 2010. The company had also developed a proprietary cross-selling engine that mined consumer data and distributed that information to bank clients for marketing purposes. When Geezeo was a consumer-direct PFM provider it used that engine to cross-sell products from the different banks it had partnered with.
Geezeo's co-founder and president, Peter Glyman, said the reason for the shift was two-fold: first, that consumers preferred to get their PFM from the primary bank; and second, since financial institutions were now paying for Geezeo's PFM platform, Geezeo "no longer needed to try to cross-sell other products and services to the customers to pay for the value of the PFM functionality."
Payoff also plans to get merchants involved by allowing them to offer rewards to consumers who reach certain savings goals or hit certain milestones along the way. For example, a home improvement or furniture store could offer a gift card or coupon to consumers about to reach their goal in saving for a new home.
This system helps encourage spending with those merchants. Payoff wins by building on the brand loyalty those merchants already have, Saunders said.
"The idea is to get brands involved in helping people achieve their dreams and goals," he said.
This differs from merchant-funded rewards programs that banks offer. In those structures, offers and rewards are triggered by a consumer's past spending habits, rather than by their new resolve for saving.
"This is rewarding existing customer behavior," Jegher said. "There is not enough being done with that."
