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Bankers hoping to increase cross-sales can now parse spending details from their customers' checking, brokerage and credit card accounts — at other financial companies.
May 6 -
Filling out tax forms has long been a labor-intensive chore, but some vendors are now connecting personal financial management software to automated tax-preparation applications.
January 29 -
As personal financial management software gains traction at banks, vendors are starting to tinker with its long-established formula.
January 27 -
Consumers — particularly younger ones who may never have touched a check register — are increasingly expecting a more interactive online presentation of their finances. And banks find that PFM provides vital data — a more complete view of a person's financial life — that can help them cross-sell.
December 28
Personal financial management software has long had a blind spot for cash spending. Some vendors are trying to change that, but fewer consumers may care than the companies realize.
Though PFM software makes it easy to track electronic spending by automatically pulling in spending data from bank accounts, it can only track cash expenditures if users manually enter the information. The tedium of doing so could narrow the appeal of cash-tracking among the consumers who use PFM — particularly as the electronic share of payments grows.
"I just don't see it as something the majority of users would want," said Cathy Graeber, the founder of the consulting and research firm Swimming Upstream. "For this group, it's, 'I want all the answers, I want all the tools, but do not expect me to put any time into it.' "
Nevertheless, since last month, Intuit Inc.'s Mint.com and Strands Inc.'s moneyStrands PFM software have added cash-tracking features, saying users had requested them.
A rival PFM vendor, Wesabe Inc., predicted few would use the new features.
Wesabe speaks from experience. It has allowed its users to manually enter cash transactions since 2007 through multiple channels — online, mobile, even Twitter — but found that only 1% of them did so.
Entering cash transactions "is laborious, and there's not much that any of us can do to make this painless," said Marc Hedlund, Wesabe's chief executive. "The market for PFM is composed, primarily, of people who don't want to take the time to do that."
Graeber said users' reluctance to track cash may actually be a good thing for financial companies that plan to integrate PFM with their online banking sites.
"For banks and credit unions, I'd be" wanting to "remind people that debit and credit transactions are easily categorized automatically, whereas cash and checks aren't," she said, thus playing up the advantage of spending on cards.
At Wesabe, the one group that actually took to cash-tracking was Twitter users, but Hedlund said this may have more to do with how people use Twitter than how people use Wesabe.
People who update their cash transactions through tweets "are using Twitter anyway, or the [software] client's already open, or they check their Twitter messages while they're waiting on line somewhere," Hedlund said. It is Twitter — not Wesabe — that provides the appeal for this function.
Apart from the modern-day twist of being accessible through Twitter and mobile, the manual entry of cash transactions was likened by Hedlund to "Quicken from 10 years ago," referring to the Intuit desktop software that predates modern PFM websites.
Aaron Patzer, Intuit's general manager and vice president of personal finance, said that in Mint's early days he would have agreed with Hedlund. "I was actually opposed, for a couple of years, to the idea of manual transactions," Patzer said. "I thought the key to PFM was: Everything has to be automatic."
But as Mint grew, more of its users demanded the ability to track cash. Since Mint added the feature last month, 10% of its one million active users (people who have used Mint within the past 30 days) have entered cash transactions.
Mint typically adds requested services only after more than 10% of its users express interest, so the current level of use is in line with anticipated demand, he said.
The people who favor cash transactions are the ones whose income is, at least in part, invisible to banks because it is paid in cash. Patzer said waiters and bartenders were among the users most vocal about wanting to track their cash.
What makes Mint's approach work is that it does as much as it can to make cash-tracking seamless, Patzer said. For example, cash spending is deducted against a user's automated teller machine withdrawals so that the money is not mistakenly deducted twice from a user's total assets. "We do our best to auto-reconcile with the automatic downloads" of bank data, he said.
Similarly, Mint lets users record checks that have not yet cleared, and when the check appears on a bank statement, Mint's software makes sure not to count it twice.
Atakan Cetinsoy, the vice president of personal finance products at Strands, said his company expects 15% of its users to take to the cash-tracking feature but that — echoing Wesabe's experience — he does not expect it to be used in all channels.
"I do expect that there will be a rather small number of people doing this through a Web app," Cetinsoy said. "With the mobile device, I think we have a much better shot."
To minimize the tedium of typing in each transaction, a planned update to the moneyStrands iPhone application would prepopulate some details of each transaction based on a user's earlier spending.
"Our goal is to keep data entry to less than five seconds," he said.
Graeber, the consultant, said such steps may leave cash-tracking's appeal confined to "that kind of anal group of customers" who demand the level of control provided by the manual entry of cash transactions.
