Wells Fargo launched an on-line money management tool in mid-February that is designed to give customers a consolidated view of their expenses. The service, called My Spending Report, combines check card and credit card spending, as well as checking and bill pay activities.
It also organizes transactions into categories-gas, groceries, etc.-to give a quick view of where the customer's money is going, says Pearl Kolling, vp and product manager of My Spending Report. "We asked customers what they wanted and what we heard was they needed help with managing their money."
Kolling says the product, which is updated daily, was in the development phase for more than a year, but she declined to reveal the money spent in R&D.
She also would not share projections on the expected level of adoption or the profitability of those customers who use this service, but she clearly expects My Spending Report to play a big role in the future of Wells. "We consider it the next generation of our on-line strategy," she says. Wells has 6.2 million on-line customers.
Industry analysts agree that this is a good move for Wells and one that illustrates the bank's position as a leader in Web technology. That said, there are shortcomings with the product, the analysts say.
Dan Schatt, senior analyst in Celent Communications' banking group, says the short time frame of archived transaction history-three months-is not long enough to be a huge benefit to customers. Another drawback is the system's inability to account for cash withdrawals or specific check purchases.
Both are areas that Wells is looking to address with additional features, Kolling says. Providing customers with a longer transaction history could take any number of forms. A 13-month rolling average and a calendar-year view of expenses to help at tax time are ideas that have been discussed, she says. Other ideas on the table would allow users to see specific checks and cash withdrawals, instead of simply having those items fall under a miscellaneous category.
Schatt also says a product like Wells' would add the most value if it were to include a complete picture of the customer's finances, not just the accounts at that particular bank. He expects to see one of the other large banks offer this type of comprehensive view within a year. "Big banks are trying to figure out their next move on personal finance functionality," he says.
The type of comprehensive view he describes would be very close to the account aggregation model that was hot a couple years ago, but had one distinct disadvantage. Companies that "aggregated" financial accounts on behalf of the consumer had a tough time getting those consumers to pay for the service, he says. But with a bank-provided service, that issue disappears because a bank could treat it essentially as a loss leader in the name of customer service, he says.
Banks are keenly aware of the value of its customer relationships, says Maggie Scarborough, research manager at Financial Insights. In the case of Wells' new product, the everyday customers that this is geared to are the source of the bank's low-cost deposits, she says, and banks will fight fiercely to retain them. Another benefit for the bank in a comprehensive view model is the potential for broader bill pay, Schatt says.
There are two competing models for bill pay. One is the "consolidator model" where a customer goes to one site and pays all his bills. The other is a "biller direct" model, where the user must go to separate sites to pay each bill. And even though the industry is largely in the "biller direct" scenario, banks clearly would prefer to see a consolidator model, he says.
Overall, the path of money management services mirrors the track record of the more affluent wealth management market. At one time, wealth managers were content to provide only their services. But as the industry grew and competition increased for the best customers, providers wanted to offer more services and become a one-stop shop, Schatt says.
Wells has applied for a utility patent for the process it used to build this product but Schatt questions the strength of such claims. Essentially, Wells built a product based on "merchant codes," he says, and that is not an entirely new concept. The underpinnings have been used many times by other companies. And even if Wells is awarded a patent, it would not preclude other banks from offering essentially the same service as long as the technology is used to compile the data in a slightly different manner.
That said, he says a patent is still a good idea on Wells' part. "It still brings a marketability," he says.
