by Hans Eisenbeis
Here’s the basic attitude toward the presenters at the financial services conference that brings together the geeks and the shirts: “You’ve got seven minutes to confuse me, unconfuse me, then explain why I want to hug you instead of punch you.”
At Finovate Startup 09 in San Francisco earlier this week, I might have felt like I’d landed among Martians speaking in acronyms like “EFT,” “XTML,” “AJAX” and “SAR.” (I was relieved, oddly, not to hear about any TARPs or TALFs or BARFs.) And the truth is, to my horror I found myself repeating one particular acronym: PFM. As in “personal financial management” tools. Of about 60 presenters, nearly half seemed to be variations on a theme that is already dominated by Mint.com and Wesabe.com (who were there to defend themselves with an arsenal of new metaphors about “financial fitness”). And to be fair, there are some interesting variations that range from white-label online banking tools like iThryv and Jwaala (the back end of your bank’s online accounting and reporting systems — doesn’t everyone have one now?) to standalone virtual financial advisors like SimpliFi and CreditKarma and personal cashflow management like GreenSherpa and Pennyminder. But the truth is, this is the space where you start looking for dead pioneers — you know, the people who got into the space first, a couple years ago, with the arrows now in their backs — and the second wave of killer apps who shot them. We’re still in chase mode here.
For a couple years now, we’ve been talking about two areas of opportunity in financial services: innovation and education. It seems the geeks have been listening. Are American consumers, deeply engaged in thrift and savings, going to provide the demand for the exploding supply of budgeting tools, reporting services and financial education? Time will tell, but my instinct is that the silver bullet here is online billpaying. The company that can best marry online banking, personal budget reporting, financial advice and billpaying in one tidy package — maybe even with an iPhone app — will get consumers excited. All things being equal, in terms of technological whiz-bang, the battle for dominance in the PFM space is to my mind merely a branding challenge. Mint and Wesabe have lapped the field already, and are beginning to springboard with bank and credit union partnerships.
There were lots of interesting startups working in the B2B and investment space, including electronic fraud detection and prevention — a huge issue for all financial services industries given the rise in cybercrime and consumer fears about it — as well as tools that aggregate information for investors and money managers. AlphaClone and KaChing are two companies that create communities of investors and money managers and allow users to compare deep metrics on performance, either to help them select a potential broker, or to mirror the decisions of successful brokers.
Payments systems also got a fair showing through the likes of SmartPay, Monetta, Mobank, Acculynk, HomeATM and others. But to be honest, I feel consumers are OK with existing solutions. Any website that allows me to use my debit card as if it were a credit card is fine by me. I know I should be worried about those non-PIN purchases, but that’s all technical backchatter to your average online shopper. The banks and merchants are responsible for security, not me — so don’t bug me with crazy new payments systems. I’m not the geek you think I am, and neither are most consumers.
Next up: Bests of Show