Monday, September 24, 2007

Kicking's tires

For any who haven't heard of it yet, is a site that aggregates all your financial accounts in one centralize portal.

I first came across a few months ago, and had a lingering beta code I hadn't yet gotten around to using. I see they went public with a splash last week, winning the TechCrunch conference demothingie, and the resulting flood of blog attention reminded me that I should go give Mint a try. So I signed up last week (after the website crawled back from the lag-and-crash slashdot effect winning the conference had), imported a batch o' financial data, and started poking around.

Here's the disclosure part of my Mint tire-kicking: Mint initially popped up on my radar as a direct competitor to a fledgling personal-finance start-up I've been doing some consulting work for. I got involved because I liked the idea of a website that will let you centrally manage a zillion financial accounts and optimize your money management. Some months down the road, I found out about Mint and how it's also working toward that goal. Yeep.

So, I have a direct interest in not having Mint be the ultimate perfect site for managing finances. On the other hand, I also have a direct interest in finding a site that will do that (it's a service I really want, dammit!), and as a personal-finance blogger and journalist, I want to check out anything that pops up in the field.

I think this is a fairly objective rundown of my impressions after a few days of working with Mint, but -- you've been forewarned. I may be biased. One important caveat: I haven't seen the demos and feature set yet for the Mint competitor I'm working with. My consulting is on editorial stuff only. So, where I criticize Mint features, I'm not trying to cast aspersions on a gap Rival Site fills; I honestly have no idea whatsoever whether they'll do better at the areas I see as flawed or not. My criticisms are based solely on what areas of functionality I find lacking for the ways I, personally, would like to use a site like this.

First, The Good Parts

It looks great. Full credit to their design team. Look-and-feel is no small thing; people have come up with all kinds of blather about what makes an application "Web 2.0," but to me, the biggest change I've seen in modern Web apps is a realization that design matters. Ugly, kludgy things are frustrating to use; we put up with it for years because we wanted the functionality software offered, but now that it's clear good aesthetic appeal is possible in software and Web apps, there's no excuse.

Also, good design costs money. I find that I trust sites more if they've obviously put in the resources to make themselves attractive -- and if I'm going to hand over the keys to my financial kingdom to a website, I'd better trust it. Mint's design (and, while we're at it, their URL -- I'm sure snagging that was pricey) suggests that they're a serious venture with resources.

Mint's account import features are pretty painless. Pop in logins and passwords, click buttons and poof! It took me about 10 minutes to populate Mint with two checking accounts and three credit cards. Within 10 minutes, I had a pretty robust data set for Mint to start mining.

The snazziest thing Mint does is automatically categorize your spending and offer dashboard-like graphs and analytics. For me, this is a fun toy. For someone actually trying to stick to a defined budget in various categories, it could be a very helpful tracking tool. (As I've mentioned previously, I don't budget.)

The big advantage of having all my accounts centralized in one interface, for me, is the ability to get a quick, high-level overview of what's happening. Mint seems more geared toward financial analytics than management. I don't see tools for, say, making a payment on a card directly from the Mint interface, or for aggregating due dates so I can see what I owe next. But if I want to just glance over all my accounts, and make sure there's no giant unexpected spikes (since we all know how attractive financial thieves find my accounts), this is a great timesaver.

Also, I like Mint's data-centralizing approach. Lots of people probably use Quicken to do similar things to what Mint does. But Quicken is a desktop app, which limits its accessibility to one PC, and it requires either data entry or synchronization. If that works for you, great. I'm lazy. It doesn't work for me. Mint automatically retrieves data from all the accounts you give it access to. I can neglect it, come back weeks later, and not have to fight through data catch-up.

The Less Good Parts

Mint is in beta, and I'm a big believer in incremental development, so I don't expect every possible feature to be in the application now. But I don't know what the future development plans and priorities are, and as Mint stands right now, it strikes me as a one-trick pony.

Mint gives you a neat set of analytics about your spending: how your current monthly spending tracks against your past spending patterns, how your cash-vs-debt ratio is doing, and so on. In addition to giving users fancy graphs and widgets, Mint uses this information to look for savings opportunities: It compares your info against some sort of data set of other available financial products, and makes suggestions.

This is both really clever and really problematic.

Mint is a free service. Mint says it plans to stay free and make its money on referral commissions from the offers shown on its "ways to save" page. This implies Mint will never show me an offer on that page from a financial services company that isn't an affiliate or advertiser of Mint. It also means those offers may or may not really fit my individual financial needs.

Mint currently has two offers showing right now for me, which it claims would save me $4,202 annually. So let's take a look at those offers.

The first offer suggests I switch my American Express card for a Discover card. Doing so gets me away from American Express's usurious 30.34% interest rate and into a 0% rate at Discover, potentially saving me $1,688 annually in forecast interest charges based on my usage pattern. Mint's calculator also adds in $515 in estimated cash-back payments from Discover.

Here's the flaws in that savings logic: The 0 percent APR is, of course, a six-month introductory one. After that, Discover's website puts the average APR at up to 18.99%. That's better than Amex's, but still a long way from 0%.

Also, if I wanted a Discover card, I would already have one. I did some pretty careful comparison shopping before picking my Amex IN NYC card as my primary plastic. Discover would be accepted at far fewer places than my Amex; I couldn't use it as a universal card as I can with the Amex for (almost) all purchases. And my Amex racks up annual rewards equivalent or better than the $500 or so in annual cash back Discover is dangling

So, Discover isn't a good fit. The second offer, swapping my Time Warner cable/Internet and Verizon phone combo for a Time Warner "All the Best" package is slightly more intriguing, but that involves swapping my landline for a digital one, and that's a complicated headache I'm going to postpone thinking about.

Overall, though, my criticism stands: I don't like the blurry line between "savings optimization service" and "advertorial engine."

If the savings offers are basically advertising window dressing underwriting Mint's core service, fine; I can live with that. But I don't know that the core service -- centralized accounts and pretty graphs -- are compelling enough to make me a regular Mint user. If identifying financial product savings opportunities are part of what Mint sees as its core service, I think the product analysis needs to be expanded beyond only those advertisers will pay to serve up.

My other big Mint criticism: As it stands now, it doesn't really track your financial life comprehensively. Part of what I would like in a financial portal is an ability to get a sense of how my longer-range financial pieces fit together. Mint is good for lining up "day to day" accounts: checking, savings and credit cards. But what do I do with my 401k? My student loans? My HSA (health savings account)? Mint's service doesn't really seem geared toward dealing with those kinds of long-term, low-daily-activity accounts.

The Uncertain

Ye gods and fishies, this is getting long. I'll just briefly touch on two other issues, and save any future observations on Mint for another post:

-Security: The immediate, kneejerk reaction many people seem to have to Mint is that aggregating all your financial logins in one place is the height of security stupidity. "One hack away from being an atom-bomb of identity theft" is how one Consumerist commenter put it.

I think that's a misguided, or at least superficial, concern. I haven't done a security dissection, but Mint doesn't seem to allow any easy reverse-engineering of stored passwords. The site doesn't display any of my logins, passwords and account numbers. To transactionally do anything with any of those accounts, I have to go offsite and log in at the provider's webpage. If someone got hold of my Mint login and password, they could see all of my transactions and get a snapshot of my financial life, but it doesn't look like they could immediately then rip off my accounts and wreak havoc with them. Sure, a sophisticated hacker could probably make all sorts of trouble if they got into Mint's infrastructure, but frankly, hackers routinely get into and make all sorts of trouble with the infrastructure of all kinds of financial services companies. I don't see Mint as any riskier than, say, having my 401k, credit card and bank accounts accessible at those institutions' Web sites.

-The future: Mint is currently running on venture-capital funding. The VC exit strategy in the Web 1.0 boom was "IPO." The VC exit strategy in the Web 2.0 boom is "get acquired."

I'm skeptical (perhaps wrongly; I dunno, I'm not a VC and haven't seen Mint's pitch presentation) that Mint's affiliate referral scheme will ever deliver booming revenue. Unless the company plans to later change its business model to introduce additional revenue streams, the likely real plan for monetizing the service is to sell it off.

It's not a bad plan. Google, Yahoo, and other Web Goliaths like to snap up sparkly startups, and Mint has a very slick interface and targets a very sought-after user demographic. I will be very unsurprised if it gets acquired within a year.

But someone, at some point, is going to have to monetize Mint, most likely through advertising. And advertising, as Mint's current offers section shows, has inherent conflicts-of-interest with optimizing your financial planning.

P.S.: I know Mint isn't the only thing out there doing what it does; other competitors include Wesabe and Cake Financial. I intend to check out Wesabe soon; Cake I'll probably avoid because it's geared toward investors, and my only investment is my 401k. Anything else I should be watching? Let me know in comments ...