A banking technology start-up is hoping to revive aggregation, an idea that many banks have tried and dropped, by combining it with financial services advice.
The company, Mint Software Inc., uses a revenue model that is similar to search engines, mixing sponsored links with unpaid recommendations for banking products.
Like other aggregation providers, Mint lets users view balances and transaction histories from accounts with any financial company in one place. However, the Mountain View, Calif., company says it can analyze the data to suggest ways for customers to make better use of their funds to save money, receive higher interest rates, or earn better rewards.
Several nonbanks that have emerged in recent years are offering financial services online, and some incorporate ideas borrowed from social networking sites. Wesabe Inc., for example, operates an aggregation Web site that lets users track their spending and offer each other tips for saving money. Others, such as Prosper Marketplace Inc. and Lending Club Corp., focus on connecting individuals who want to borrow and lend money from each other instead of from banks.
But Mint, which does not depend on social interaction, has recast aggregation as a way to earn revenue from advertising.
Its technology is built on aggregation software from Yodlee Inc. that gathers data from users’ bank and credit card accounts. Mint’s software then crunches that data to offer recommendations on its site for other products and services that might benefit users.
Aaron Patzer, Mint’s founder and chief executive, said the site can “categorize and classify all of your transactions.”
It uses that data to suggest specific products and services, which users can view on a “Ways to Save” section of the site, he said. For example, someone with a high balance could be steered towards a high-yield online savings account, and someone who buys a lot of gasoline might be advised to apply for a credit card with gas rewards.
Mint’s business model is based on two main sources of revenue, Mr. Patzer said. The company is trying to attract financial services companies as sponsors by offering to include information about their products in an education section of its site, and to include logos when their products are touted to users. Sponsors also pay Mint a fee when its advice persuades someone to apply for their offerings.
Though Mint will recommend products and services that are appropriate for a user’s needs, regardless of whether a sponsoring bank offers them, having sponsors’ logos appear alongside their products could increase the number of applicants, the company said.
Mint began with 9,000 test users in July and began offering its service to everyone last month. As of Tuesday it has signed up 50,000 users. Consumers pay no fee.
Also Tuesday, Mint said that in April it had received $4.7 million in financing, which it used to triple its work force, to 15 people.
“People have the opportunity to see those savings opportunities within a minute of signing up,” Mr. Patzer said, though “they typically don’t do it the first day.” Most of the test users began accepting offers after using the service for two to three weeks, he said.
The site currently focuses on suggesting credit cards and deposit accounts, but Mr. Patzer said it will begin suggesting student loans and mortgages soon.
Mint presents its recommendations much like search engines do — distinguishing sponsors’ offerings from others. ING Bank FSB’s sponsored link for its Electric Orange checking account “is doing very well,” Mr. Patzer said, but one of products recommended most often is a credit card with gas rewards from a nonsponsor, Citigroup Inc.
Todd Sandler, ING’s head of deposit services, said that so far Mint’s site has proven to be an effective advertising channel, in part because it is reaching people who are already examining their finances and thus are receptive to offers that could improve their saving habits.
“Not only are they online bankers, but they are one step above that. These are people who are very actively managing their money and finances,” he said.
ING uses an advertisement distribution service provided by Commission Junction Inc. Mr. Sandler said that Mint.com stands out as one of the most effective sites where ING has advertised through that service.
Edward Woods, a senior analyst for the Boston market research firm Celent LLC, said that even though Mint’s early success is “phenomenal,” it still faces the same challenges that doomed aggregation on many bank sites.
“You still have to get over the hurdle of ‘It’s aggregation. You have to give your credentials out,’ ” he said. Trust is a big factor in consumers’ minds, and “I don’t know Mint.com from Adam.”
