20 nov2014 personal financial management_ve

Personal Financial Management TechnologyLunch & Learn

November 20, 2014

KNOWLEDGE FOR ACTION

Agenda

• News and announcements

• Personal Financial Management Technology: Overview

• Company Highlight: Mint.com

• Company Highlight: LearnVest

• Guest Speaker: Tom Vladeck


Personal Financial Management Technology: Context

Personal financial management technology enables and educates consumers and small

businesses to better manage budgeting, monitor saving & spending, and optimize financial

decision-making

•Online and mobile platforms that provide financial advice and/or analysis to individuals and small business owners

•Most PFM companies offer their services for free or use a freemium model

•Managing your personal finances is becoming increasingly complicated – the objective / mission statement of PFM tech is to simplify, explain and advise on personal financial matters

•One of the largest sub-sets of FinTech – 110+ companies, nearly $1B in funding•Broadly applicable – everyone could be a potential user


PFM Tech: Industry Map

Budgeting Tools (Save vs Spend) Financial Planning / Advice

Credit Card OptimizationRobo-advisers

Personal Financial Management Sphere


PFM Tech: Business Models

1

2

Lead generation

Paid premium services

• Targeted “advice” or “recommendation” that drives acquisition for other companies

• Typically a flat fee (e.g. $100 referral per approved credit card application)

• Also known as a freemium model – users get some, basic service for free but have to pay extra for additional value or service

PFM companies typically use two key monetization strategies: lead generation for

credit/investing products and/or paid premium services

• Larger PFM companies that can attract high volumes of page views (such as Mint.com) also display ads and generate additional revenue by selling ad space


PFM Tech: Business Models (cont.)

How sustainable / lucrative are these business models?

• Heavily dependent on current economic conditions – if credit dries up or consumers stop applying for loans, lead gen plummets

• Freemium model requires a sticky product in order to be successful

• Regulatory issues – CFPB can question whether credit card or other loan product recommendations are truly objective

• Very easy to implement – most banks and other financial institutions have ready-made APIs for lead gen

• Freemium model enables “mouse-trapping” – a free, sticky product can drive significant organic growth for the premium, paid version (think Kim Kardashian iPhone game generating $100M+ annually)

Rewards Risks


Agenda







PFM Tech: Targeted Deep Dive

• Launched in 2006: largest, most-well known PFM company

• Recipient of numerous awards and positive media coverage for its service

• Financial data aggregator – scrapes user’s bank, credit card, investment and loan transactions and balances into one UI

• Acquired by Intuit in 2009 for $170M

• Claims to have over 10M users that are connected with 17M financial accounts

• PFM start-up launched in 2009 by a HBS student (Alexa von Tobel), originally intended for women only

• Have raised about $60M in funding (up to Series D)

• Specialize in financial planning and consulting – paying users are paired with a CFA who creates a customized financial plan

• Promote financial literacy and education through a library of articles and blog posts


Mint.com: Deep Dive


Mint.com: Business Model

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Mint.com: Business Model


Agenda







PFM Tech: Targeted Deep Dive

• Launched in 2006: largest, most-well known PFM company

• Recipient of numerous awards and positive media coverage for its service

• Financial data aggregator – scrapes user’s bank, credit card, investment and loan transactions and balances into one UI

• Acquired by Intuit in 2009 for $170M

• Claims to have over 10M users that are connected with 17M financial accounts

• PFM start-up launched in 2009 by a HBS student (Alexa von Tobel), originally intended for women only

• Have raised about $60M in funding (up to Series D)

• Specialize in financial planning and consulting – paying users are paired with a CFP who creates a customized financial plan

• Promote financial literacy and education through a library of articles and blog posts


LearnVest: Deep Dive


LearnVest: Deep Dive

v


LearnVest: Business Model


Targeted Deep Dive: Summary

• Do-it-yourself model – Mint.com provides the tools, you are responsible for doing your own tracking, planning, and analysis

• High number of users, but how many of them are actually active?

• Likely little long term growth potential – essentially now a low-cost revenue stream and customer acquisition platform for Intuit

• Hand-holding model – aimed at users that care about personal finances but don’t have the time/energy/knowledge to use a Mint-type product effectively

• Scalability is an issue – have to maintain a “call center” of CFPs in Arizona and elsewhere

• Value-add is questionable – would you pay $600/yr for a financial planner?


Agenda







• Who I am and why I’m here

• Topologies of behavior – rough findings from discussions with Wharton students

• Product concept: Cache

• Questions to answer + Roadmap

• Feedback + Q&A

Cache: Behavior Based Savings and Investment


Topologies of personal financial management

Savings

Checking

Expenses



Savings

Checking

Expenses

Investment

Accounts



Checking

Expenses

Investment

Accounts



Savings

Checking

Expenses

Investment

Accounts






• Feedback + Q&A



• http://bitly.com/whartoncache

• Automated passive-investing tool based on behavior

• It learns your spending behavior, and whenever there is an opportunity to save money, the service automatically invests it for you

• It requires the user to sign up with their active cards and link their checking account, and (maybe) choose some sort of investment allocation


http://bitly.com/whartoncache






• Feedback + Q&A



Four questions to answer• What will people use?• How much will they pay?• How much will it cost to acquire each customer?• How big is the market?

Examples:• Queue transactions or make them easily reversible?• How much flexibility in investment do people need?• Better to have a per-transaction or percentage fee? • Better to partner with a “backend” provider?

Roadmap• Refine copy on landing page• Launch and get traffic (big question mark…)• Iterate messaging and answer first four questions• If enough signups, start developing the product







• Feedback + Q&A



Questions

@whartonfintech

Wharton FinTech

Wharton FinTech

whartonfintech.org

Wharton FinTechSponsors

20 nov2014 personal financial management_ve

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