November 5, 2010 |
The failure of another fledgling personal finance website – in this case it was little-known Rudder – should come as no surprise. It’s a tough playing field. The strange thing is it’s dominated by the threat posed by banks and credit unions that haven’t even trotted onto the field yet.
Mint remains the leading personal finance website site out there, and its innovative record will keep it there. But Mint’s real competition will begin as banks and credit unions overhaul their online banking to feature personal finance management tools right from the log-in. Those products are in the market from the likes of Intuit Financial Services (Mint’s sister), Fiserv, FIS, Online Resources, Strands and Yodlee. These products have the potential to remake online banking so it has a Mint-like feel and much more – notably, the ability to transact and complete financial chores.
Rudder was an example of a startup that aimed to tap into the consumers’ need for better ways to monitor their money held at several FIs. One of Rudder’s twists was that it pushed out e-mails to users that provided status updates, a concept that put it in a proactive role of pushing out information that users otherwise might neglect out of inertia. But Rudder didn’t help its reputation – or the PFM industry’s efforts to instill confidence in security – when it mistakenly sent a bunch of those updates to the wrong users in May 2009.
That snafu – the company was right in not calling it a “breach” – underscores a key finding in a Javelin PFM report that will go to subscribers next week. Once again, Javelin consumer data shows that consumers trust banks and credit unions a lot more than PFM websites when it comes to protecting log-in credentials. That makes it tougher for ventures like Rudder and Wesabe, which closed in July, to gain enough traction to survive.
It is a mistake to interpret Rudder’s demise as evidence that consumers don’t want PFM capabilities. They do, as our upcoming PFM report drives home. They hunger for a better way to see all their accounts consolidated in one place, and banks and credit unions are the logical place to do so. Banks and credit unions that recognize that will win the real battle: to become a consumer’s primary FI.