Rudder Inc., the provider of a new financial management and aggregation service, plans to reach users by e-mail — a contrast to the growing number of companies that offer similar capabilities primarily through Web sites and say the social experience of the Internet plays a critical role in their model.
Nikhil Roy, Rudder's founder and chief executive, said that he is emphasizing e-mail because people do not enjoy managing their finances in the ways that are currently available. "It's something that's not sexy, not attractive to them," he said in an interview last month. "We're going beyond the desktop and online and really leveraging our users' favorite application, their e-mail client."
The Houston company is expected to go live today with its service, which delivers regular e-mail updates that can be customized to show specific types of transactions, available balances, and other financial details.
This is actually the company's second attempt to develop a financial management service. The earlier one, dubbed SpendView, was more like the online services offered by Wesabe Inc., Mint Software Inc., Geezeo Inc., and Intuit Inc. Mr. Roy said his company scrapped that service while it was still being beta tested and decided to take a different approach.
"Not all users' needs are the same," he said.
Rudder users can choose how frequently they receive their updates, or they can turn the e-mails off and use a Web site to get their information. The default setting delivers updates at 7 a.m. daily, but the system be configured to send them at any time.
Rudder plans to make money from merchants by sending users coupons that reflect their spending habits. Users would receive offers only from merchants where they already shop, and Rudder does not share transaction data with advertisers, Mr. Roy said.
Like Geezeo, Rudder uses CashEdge Inc. of New York to access customers' bank accounts and aggregate the information online.
In addition to the targeted coupons, Rudder will charge a fee for some of the applications its users can use to customize their view of their finances, Mr. Roy said. (The basic updating service will be free to consumers.)
In conjunction with its paid applications, Rudder might offer services from other companies for a fee, including looking up credit scores and credit reports, Mr. Roy said.
Some of the applications will involve one-time purchases, but others will have a recurring annual fee, he said.
Free applications include What's Left?, which calculates how much money in a user's account is available for spending, using the current balance and predicted payments to billers. Those payments are determined by analyzing the dates and amounts of past bill payments.
Nikunj Somaiya, Rudder's chief financial officer, said another tool, the budgeting meter, lets users set savings goals and see how individual transactions eat into their accounts over the course of the month. "It shows you the impact of your disposable spending on your longer-term savings goals."
Rudder's revenue model is different from those of its rivals. Intuit charges a monthly fee to use its service, while Geezeo and Mint use advertising and paid referrals. Wesabe has not disclosed its model.
George Tubin, a senior research director at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said Rudder and the other online financial management companies are "being very inventive" in devising ways to offer aggregation to consumers.
Technologically, "a lot of the things they do, banks can easily replicate," but banks have reasons not to do so, Mr. Tubin said. For example, consumers may be less receptive to receiving coupons from their bank, he said, because they would perceive it as more of a violation of privacy than they do with companies like Rudder, which are not as closely tied to their finances.
"Banks, tending to be conservative, have shied away from overtly using that spending data," even though they have unobstructed access to it, Mr. Tubin said. "There's always the question of where does the bank cross the line."
Mr. Tubin said Rudder's revenue model sounds good, if a bit conservative. It has said it will keep its e-mailed coupons relevant by sending them only on behalf of merchants where the customer already shops, but he said it could also send coupons for rivals to those merchants, thus expanding the pool of potential advertisers.
In relying on e-mail as its primary channel for interaction, Rudder may have to deal with what he called the classic bank foes of the Internet age: phishing and spam. There may come a time when Rudder will have trouble convincing its users which e-mails are legitimate and which are impostors, he said.
That said, the service holds appeal to younger consumers who are more savvy about the risks of handing their finances online, Mr. Tubin said. "If you're targeting the Gen Y demographic, they end to be a lot more trusting and maybe not as suspicious."
