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Wednesday
May272009

Mint vs. Wesabe: the value of online communities

 

I recently had to pay the library on overdue charge for a personal finance book called “You’re so Money!” Unfortunately, my life is full of such “ironies” where my attempts to make the most of my money cost me more than I save. So when I heard about mint.com I ran home from work to check it out. The free personal finance website aggregates all of my financial statements from checking and savings accounts, credit cards, and investors in one place on a daily basis and then provides me with colorful charts on how I spend my money, ideas for how I can save, and alerts when I break my budget.

Like the p2p market places, social lenders, and prediction markets we’ve profiled, Mint is an example of how technology can cut out the middle man (financial planners in this case), heighten transparency, and facilitate informed decision making. By transforming our daily financial dealings into meaningful graphs and tools, Mint helps to demystify and even beautify (with its universally-loved interface) the world of personal finance.

Mint.com is not the first site of its kind. It competes with Wesabe, a site that began in 2005 and offers similar personal finance services. Many bloggers have compared the two: They both h aggregate all of your financial statements, track your cash flow, and help you create ad stick to a budget. Mint.com is more convenient and user friendly because it automatically updates your graphs and budget every night. It is also the Marcia, Marcia, Marcia of the bunch. Wesabe is more flexible and secure because it allows you to easily change how your expenses are bucketed and also gives you the option to manually update your financial statements—a slower but more secure process to aggregate your personal financial information.

While both models enhance transparency, cut the middleman, and engender more informed decisions Wesabe brings the extra element of community to the table. Its users join a social network where discussion groups allow them to ask questions and contribute to a variety of ongoing personal finance conversations, from limiting consumption to planning retirement, traveling the world and buying a house.

Nevertheless, the younger Mint appears to be doing better than its predecessor. (For an interesting analysis click here.) Is it because users don’t value the element of community? In p2p markets, social lending, and prediction markets, it is the online community that provides the key service. Etsy, Kiva, and Intrade bring no service to the user if there isn’t another user (to sell, lend/borrow, or trade with), but Mint brings the same value for the user regardless if he or she is the only user or one of millions. While Wesabe’s community might provide good advice to users it is not central to the provision of personal-finance services.

This is a reminder that there is a difference between an online community that provides support and one that provides a service. For Wesabe to increase its competitive advantage it will have to stop relying on its element of community and focus on its provision of personal-finance services. The twist is that its online community provides the key. The close relationship between the Wesabe’s management team and its users on the site’s discussion groups is where the answers lay. Improving its interface and convenience are the users’ first requests.

 

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