Over the last few years I have from time to time played with the idea of creating an online personal finance app, but always balked at it given some of the challenges. In recent weeks I’ve tried a number of online personal finance apps such as Mint, Wesabe and Kublax, and I’ve basically come to the same conclusion I’ve come every time so far, it doesn’t make sense.

First of all, what all these companies seem to have in common is that they use aggregation technology provided by Yodlee. Correct me if I’m wrong, but to me it seems like Yodlee are the ones sitting on the motherload, whereas the end user applications are merely a thin veneer on top of Yodlee that add very little value to the overall picture.

But now on to my real beef with having this sort of application online:

  • You want me to give my bank details and internet bank login details to you? Forget about it! I don’t care if you say you don’t store it permanently, I don’t care what security you say you have in place. People lie, companies lie, disgruntled employees wreak havoc. You’re not getting shit from me. Unfortunately, at least the above mentioned online apps are more or less useless unless you pony up with all the information on every bank account you have ever held. Great way to get potential customers to turn at the entry door.
  • Import my financial statements so.. I can see what I already see in my internet bank? Where’s the value add? I can display my transactions with my internet bank, no problem. Yes, there’s tagging etc, but very few of the above mentioned companies go any further than providing me with the exact same breakdown as my internet bank.
  • Where’s the business model? Like I said, Yodlee is sitting on the motherload in this case – the logical business models are data aggregation and/or providing technology to existing financial institutions, both of which Mint et al can be cut off from at a moments notice, because, well, they don’t own that relationship.
  • Trust a startup with my financial information? There’s a mountain to climb in terms of trust. Sure, Mint probably has a pretty big user base, but I’m guessing very few people are prepared to store sensitive financial data online.
  • Did I say I just don’t trust anyone else to store my financial data on the internet?

The single biggest obstacle I see is that of trust, security and privacy – shit happens, insecure code gets deployed live, disgruntled employees mine data for one last payday, hackers gain access, companies in financial trouble get “creative” with their revenue streams.

When it comes to personal finance, I think desktop apps will probably dominate for some time yet. The fact that the online apps I have looked into are shoddily implemented and executed, making them counterintuitive and hard to use hardly helps their cause, neither trustwise or usabilitywise.
There will probably be two areas for which “online” personal finance will work: data aggregation technologies/API’s for banks and desktop applications, and data analytics technologies for existing financial institutions, both areas from which consumer oriented online personal finance apps are locked out of.