Internet booming with financial websites
Launching a financial website in the middle of an economic slump might not seem like a good idea, but Scott Saunders believes the timing couldn’t be better.
Saunders and his partner launched Culver City-based Payoff.com four months ago on the theory that Americans would be far more likely to use a financial site during a troubled economy than a roaring one. Payoff.com tracks consumers’ progress in paying off debt, and Saunders figures there are loads of people who need the help.
“It’s a site for any economic environment but getting people to our front door is easier in this kind of economic environment,” Saunders said.
The economy might be faltering, but financial websites appear to be booming — at least judging by the number of sites springing up lately.
Though no one keeps an exact count, industry analyst Jim Bruene estimates that there are at least twice as many financial sites today as there were three years ago.
“There are a lot [of sites] and they keep coming out, and I see it worldwide,” said Stessa Cohen of technology research firm Gartner Inc.
One common feature of many newcomers: They don’t want to come across as heavy-duty personal-finance sites.
To lure mainstream consumers — who need financial assistance but are bored by, and sometimes scared of, personal finance — the sites downplay any hint of hard-core number-crunching.
“Our goal is to make our site as light as possible,” said Mike Melby, chief executive of Irvine-based PayDivvy.com, which calculates bill payments among roommates.
That’s a wise strategy, said Marc Hedlund, who founded personal-finance site Wesabe.com in 2005 only to have it fail five years later.
Longtime personal-finance sites have a dedicated, but relatively small, group of savvy do-it-yourselfers, Hedlund said. They’ve been less successful at luring the far greater number of average Americans who don’t want to spend hours inputting data and poring over numbers, he said.
“Getting people to dive deep into their financial statements is the path of failure,” said Hedlund, who said his site failed in part because it required too much effort from its users.
To avoid that mistake, Payoff.com is built around the notion of “game-ification,” Saunders said.
Its home page looks more like a game board than a financial portal. “Money made simple, social and fun!” it proclaims. The site exhorts users to “earn fun badges” and “win cash surprises” for whittling down their debt or achieving other financial “dreams.”
“ ‘The Biggest Loser’ [TV show] has made it fun and motivating to lose weight,” Saunders said. “They brought a lot of jazz to weight loss. This is the ‘Biggest Loser’ for your money.”
It won’t be easy, however, for the sites to succeed, analysts say. Competition is intense, and many sites face a big obstacle in simply getting the word out that they exist.
“Most people aren’t going to seek out these third-party sites,” Cohen said. “That’s just a fact. How do they get more exposure?”
The challenges aren’t lost of entrepreneurs such as Melby of PayDivvy.com.
“There’s no question that we pay attention to the signs and we look at the case studies,” he said. “We don’t sit here with hubris thinking we’re better than everybody who went before.”
Melby got the idea for PayDivvy.com when he lived with four roommates in Newport Beach and they split eight bills. “I couldn’t collect from anybody,” Melby said.
Like some other financial-advice sites, PayDivvy.com has raised venture-capital funding and its primary audience is the roughly 20- to 34-year-old demographic.
Personal-finance products have gone through several iterations over the years.
Software such as Quicken and Microsoft Money in the 1980s gave consumers vast new ways to analyze their financial lives. And the emergence in recent years of various Internet sites gave access to, among other things, real-time data and direct interaction with other consumers.
Personal-finance websites come in different forms, with services including general advice, budget tracking and stock quotes. Some of the better-known players are CNN Money, Mint.com, Yahoo Finance and Bankrate.com.
In contrast to the range of offerings at many older sites, a number of newcomers typically focus on narrow niches. Some tackle services offered by competitors, but with what they insist are better mousetraps. NerdWallet.com helps users pick credit cards, while Optirate.com will focus on bank certificates of deposit when it opens early next year.
The sites are looking to draw users such as Stephanie Silberstein, who turned to Payoff.com for help in tracking her student-loan payments.
The 27-year-old engineer was making payments on her loan diligently but likes the assistance she gets from the site.
“I still would be paying it off, but having these goals staring me in the face keeps it in my mind and makes me motivated to pay it off faster,” Silberstein said.
