March 17, 2009

Money Management Services Help Out During Economic Turmoil

A variety of Web sites offering money-management services are helping a new generation of tech savvy investors navigate the current economic climate.

"All banks are evil," said Aaron Patzer, founder of Mint.com, during a 'Finance 2.0' panel discussion at a South By Southwest Interactive (SXSW) meeting in Austin, TX on Monday.

"Banks are self-serving. Banks are slow moving... the websites they put out are crap compared to the things we can do online. No good engineer wants to work for a bank; it's no fun."

Mint launched its beta site in September of 2007, and now boasts over one million users.  The sign-up rate has tripled since the financial crisis began, Patzer said.

The website's free service securely compiles data from user's bank, credit card and other accounts and lets them know how well they are managing their money.

The site sends emails or text messages to notify users of upcoming bills, unnecessary fees, unusual account activity or other potential money problems.  It also gives advice on how to save money.

"Our mission has always been to help people save and do more with their money," Patzer said.

On Monday, SmartyPig.com unveiled software that allows its "social banking" service to be added to money management websites such as Mint, Buxfer, Wesabe, MoneyStrands, Yodlee, Thrive, and Microsoft Money.

The service, which launched in 2008 in the U.S. and Australia, provides users with Web tools to "leverage the age-old idea of saving up for purchases before buying."

The site's social component lets friends in communities such as Facebook deposit cash in friends' cyber piggy banks to help them reach their financial objectives.

"We recognize how important it is to securely manage your finances, set goals and help change the credit card mindset of 'buy now, pay later,' that has contributed to the current downturn," SmartyPig co-founder Michael Ferrari told the AFP.

The service appeals to what SmartyPig called "younger, plugged-in" people seeking fun and simple ways to save for specific goals, such as travel or college tuition, the company said. 

"With all the tools here, the community of people who buy things can be bank agnostic," Keeping Nickels blogger Nichelle Williams, a member of the SXSW panel, told the AFP.

"We can just find the services we want at the cheapest cost. There is a community on Mint.com, and we can galvanize everyone around something like a bank charging crazy fees."

Patzer says U.S.-based banks will generate tens of billions of dollars in fees this year alone.

"A bank is not necessarily there looking out for you," said Murali Subbarao, founder of online service Billeo.

The site allows users to ensure they pay monthly bills on time, avoiding late fees and keeping their credit scores high.

Williams said she constantly bombarded with money questions from readers of her posts at the personal finances blog.

SmartyPig has seen its popularity climb since the recession began.

"Our business continues to do better as the economy does worse,"  Ferrari said.

"It has taken this economy to get people to start thinking about the resources that are out there in the blogosphere and start being smarter with their money. I felt the love pouring from Twitter during the last couple days."

Those who run money management websites say they are obsessed with security, and protect their servers with "Mission Impossible" like defenses that undergo rigorous auditing.

"Online applications are still charting new ground," said Stephens.

"Don't be afraid. I'm not saying banks are the enemy, but if you are smart you can beat the bank."


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