It works for fashion and the fragile ecosystem that guides teenage social structure, but ING's about to find out if peer pressure also enables informed, contextualized personal finance decisions.
"Peer comparison can be a powerful tool," says Denis-Martin Monty, director of strategic innovation for U.S. retirement services at ING.
Monty sounds like he's talking about high school cafeteria dynamics, but he's actually discussing www.ING
CompareMe.com, a new Web portal that allows people to view the personal finance habits of groups of similar but anonymous peers. "When people see what others like them are doing, they may want to contribute more to their employer sponsored retirement plan, or for another group it may spur a decision to save more money," he says.
ING's free service works by asking users a handful of questions to form a profile page: age, gender, income and marital status - with up to 30 demographic comparisons possible based on of those four metrics alone. Optional questions drill down further - including queries on education level, children under 18, home owner or renter, occupation and lifestyle questions such as hobbies and interests.
The data in the portal comes from questions answered by other users, is baselined by ING's original survey of 5,000 consumers who answered 150 different demographic questions, and is frequently updated to account for changing market conditions. Since the site launched in Jan 8, about 150,000 users have entered about 1 million pieces of data into the system.
The portal, which is aimed at all market segments and both ING customers and noncustomers, is not a sales site. But it doesn't have to be - the fact that a user is on an ING site getting information about the use of financial planning tools and strategies similar to those offered by ING is apparent.
Peer portals could also serve as a valuable CRM play, since the bank is positioned as a partner and source of comfort to consumers rather than a firm trying to sell investment and savings products - even though the implied goal of the portal is to get users to tap into deeper information about financial products and advisory services.
"Today you've got a lot of people who are worried about savings and day-to-day expenses," says Prince Varma, a client partner for Baker Hill, an Experian company. "That's where there's an opportunity for institutions to deliver a benchmark for people that can serve as a wakeup call for consumers."
ING would appear to be an early arrival to the peer comparison party - market sources said they were unaware of any other large bank offering a similar service. But the institution is elbowing into space occupied by firms like Mint and Geezeo, which both offer varied forms of online peer comparison for investment and more mundane day-to-day financial management.
The 18-month old Mint service aggregates data from more than 7,500 banks, credit card companies, brokerages and other financial firms, with information pooled on a nightly basis. The service provides peer comparisons and rate alerts based partly on what users enter - information on a user's savings account interests rates may spark an alert about a better rate at another bank, for example.
User also enter a variety of financial activities, including money spent on stuff like gas and groceries, with peer comparisons based on regional metrics to take relative cost of living into account. "If an average Manhattan resident fitting your profile spends $400 on restaurants and $150 on groceries in a given month and you spend $800, maybe that's an area where you can cut back on spending," says Aaron Patzer, founder and CEO of the Mountain View, Ca.-based Mint, which currently has about 100,000 users.
Geezeo's site is more "goal oriented," in which users leverage a private link to track progress toward a specified investment or financial goal, such as paying off a credit card or attaining a certain savings level, and can then opt in to discussions with peer groups. "There's strength in numbers," says Peter Glyman, co-founder of the Hartford-based Geezeo, whose discussion groups have about 50,000 participants. "It's not voyeuristic in terms of people's income or debts, but is more a discussion around those events."
The growth of Web services has enabled these platforms to easily and cheaply aggregate large swaths of consumer transaction and account histories and organize that information along demographic lines. But what's also driving the adoption of these platforms is a change in consumer and bank sensibilities regarding the use of personal information as part of a peer portal - people are more willing to share their financial picture, provided that information is anonymous.
"In the past, the privacy of this data was considered to be more important, and banks didn't want to show what your peer group was doing," says Alois Pirker, senior analyst, Aite Group Boston. "But now it's considered to be peer pressure in a good way."