Wesabe, one of the first personal finance management tools I wrote about when WalletPop was but a young blog, announced today that after July 31 it would no longer operate the accounts tab of the website. In an announcement posted to Wesabe.com Marc Hedlund, CEO of Wesabe, cited the inability to maintain customer support and security on a shoestring budget.
Hedlund, who was known to contact users directly from time to time to help solve support problems, was able to share one bit of good news; the Wesabe Groups section of the website will remain open indefinitely. The "Groups tab," Hedlund explains, is cheaper to host, and it is a great resource to users who have relied on the community to help them make big financial decisions and offer financial advice specific to their situation.
In addition to the "Groups" section of Wesabe, the website was best known for its Data Bill of Rights, which assured users that, "your data belongs to you" and offered the ability for users to upload transaction data from their bank without linking accounts directly to Wesabe. Part of the Data Bill of Rights at Wesabe was the fact that the company did not use a third party solution to manage accounts and security. Instead, Wesabe built its own tool, which likely played a part in the cost of keeping data secure.
What does the closure of Wesabe, which was free, mean for the personal finance management space as a whole? Will you still be able to manage your money online for free next year, in five years?
The good news is that yes, there will still be tools which don't charge users a monthly fee to manage their money, but expect to see a greater focus on ads and tie-in products in these offerings. Ultimately, the personal finance management space will fall into three categories; free with ads, set monthly fee, or at your bank.
Free, but Ad-Supported: Popular money management tools like Mint.com will continue to operate as a free service which makes money off of ads and partnerships with financial institutions. Mint, which is owned by Intuit the maker of Quicken and other products, also has the advantage of offering Mint.com for free and graduating users to the Quicken offering as their needs grow or become more specific.
Monthly Fee: HelloWallet, which we recently reviewed, charges users $5 a month to manage their money and also partners with organizations and employers to provide discounted services. This model should allow tools like HelloWallet to continue to offer users a premium experience without running into the same financial issues that impacted Wesabe.
At Your Bank: Most of us associate personal finance management tools with third parties; not with our stuffy old banks, but that's a changing trend. According the a report from the Aite Group, one in five banks already offer PFM tools online and six in ten will be evaluating the addition of PFM tools in 2010. Many banks, large and small, are rolling out PFM products that allow users to link the rest of their accounts to the bank they use the most. Certain banks are using the Yodlee platform to give users features similar to Mint.com and in many cases the tool is free for bank members.
Wherever you manage your money, don't expect to get world class security and service without paying for it or seeing ads and partnerships. In order to provide a user friendly tool that is secure, companies will need to make money somewhere.
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