The web just seems to be made for managing money. From the beginning, things like stock trackers and portfolio trackers were present, and they keep getting more sophisticated. Direct trading online forever changed the investment industry. Payments were next, but quickly moved outside the control of the banking sector.
PayPal and its rivals
PayPal, of course is one of the gorillas, and shows signs that it may someday try to do more than facilitate payments. Initially, it was about buying online, but it rapidly expanded the options for both payers and payees. Some time ago they added a personal payments function, so you can send money somewhere.
It seems so easy, but it wasn't that many years ago that people had to do things like wire money to do this sort of thing. You can already keep funds on your account there, and go across currencies with ease. It would be a short jump for PayPal to add other features that would make them look a lot more like a bank.
While PayPal has buried most of its direct competitors, there are still lots of P2P payment systems around. And eventually the banking industry caught up, and said 'OK, you can e-mail a payment. But only if you aren't a business.'
There are many other direct P2P payment systems around. iKobo is still in business, using fulfillment of the transfer via a VISA prepaid card at any of one million ATMs worldwide, and anywhere else that VISA is accepted. Senvia is another. There may actually be hundreds of these, targeted at specific ethnic and geographic niches. At one time, Western Union and your country's Post Office virtually owned this game. Not anymore.
Budgeting systems, the new battleground
The new battleground appears to be budgeting tools that help the average person manage their money more effectively, linking directly to the transactions.
CIBC has budgeting and expense management tools attached to its credit cards through a service called CreditSmart.
Manulife One launched a service to permit you to integrate all your balances and offset borrowing costs. In addition to this, the statement classifies spending. It seemed like a really smart idea, but seems to have lacked serious uptake due to the lack of retail distribution power such as the banks have.
There are more online budgeting tools than ever. Many of the most recent entries have nothing to do with a bank, and they are definitely going to force the financial industry to raise the bar if they want to stay in the game. Here's a few that have come to my attention -- and I'm guessing there are many others.
The Automatic Money Manager promises to help you "take control of your money."
"The system retrieves all your transactions from your financial institutions, automates your bills, manages your spending & savings, and gives you access whether you are at home, work or on your mobile phone."
The system works using the "envelope" system of budgeting, with direct linkages of your accounts to the tracking system. For things like credit card spending, every transaction on a credit card is automatically linked to the "pay credit card" envelope, to encourage full balance payment each month.
Pretty slick for only $129 per year, or $189 if you sign up for two years.
MVelopes promises "complete control of your finances" for the same prices as above, and also has mobile phone access. A really informative site, it even lists the banks you can link into. And it's a HUGE list.
Banzai promises similar benefits for only five minutes a day and $4.95 a month, and calls their envelopes Jars. They have the added benefit of bonuses for signing up others. They've brought their fake-Zen-speak to the site, which makes me think they won't make it over the long term.
Mint offers the same automated account linkages and some budgeting features, and it's free. [It's not entirely clear to me what their business model is, but I'm guessing it's targeted advertising for financial products.] In addition, Mint lets you compare yourself to others on spending and saving.
If you want to set goals and track more than your budget numbers, there are starting to be services for that, too. Goalmigo and 43Things are social communities where you can set and monitor goals and get group support.
MyProgress promises to track how you are doing relative to everyone else on practically everything, from net worth to fitness. [Looks like a lot of data entry, however, so I didn't have the patience today.But dang, the possibilities are enticing, aren't they?]
All that stuff that used require hard work with a ledger book looks like it might finally become automated. And if, like me, you hate repetitive detail, this could be a really good thing.
Acknowledgements and stuff
Thanks to TechCrunch for some interesting comments on MyProgress, and the lead to Goalmigo
If you want to see how this trend translates to business, check out Bizner.