When Intuit announced late last year that it was shutting down Mint, one of the oldest personal financial management (PFM) platforms, it disappointed millions of fans. Mint’s real-time updates of investments and spending changed the PFM game and ushered in a whole new set of expectations around PFM tools.
The problem? As addictive as Mint’s tools were, the company shied away from asking customers to pay to use them. Late in its life, Mint did experiment with paid tiers, but advertising was always its main revenue source. A recent research report from FT Partners concluded, “Most people have not been willing to pay for budgeting tools on a standalone basis.”
To be sure, there is an ample crop of PFM apps that think they can succeed where Mint didn’t. One of the oldest is YNAB, which launched in 2004. It pledges to help users “give every dollar a job,” and charges them $99.99 a year or $14.99 a month, a popular price point in this category. Another is Simplifi, a personal budget spinoff of Quicken (which was once part of Intuit but was sold in 2016), which charges $3.99 a month.
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Recent arrival Monarch Money is actively recruiting former Mint users, providing a 50% discount on its normal fees (which are the same as YNAB’s) for those who transfer their account information from Mint.
If the demand for sophisticated personal finance tools isn’t going away, is there an opportunity for banks to compete in the post-Mint void? What would they need to do to stand out?
To answer these questions, we talked with Val Agostino, the cofounder and CEO Monarch.
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Agostino was actually the first product manager at Mint. The inspiration for launching Monarch in 2018, he said in an interview, “was to help people think about what to do next and create a plan and revolve beyond budgeting into like a more full-featured financial platform.”
A human advisor, he notes, would be able to answer forward-looking questions, which the early PFM tools didn’t do: “Do you have the right levels of insurance? Do you have the right estate planning in place? How do you optimize for taxes?”
Monarch won’t disclose how many subscribers it has, but Agostino said the company is both profitable and growing rapidly. Perhaps unsurprisingly, Monarch got a big boost when Intuit announced that it would shut down Mint. There were even, he said, “a whole bunch of Canadian users that were kind of hacking their IP address so that they could get access.” Monarch swiftly decided to open its services to Canadian customers.
Agostino argues that two related changes in consumer behavior have made it more likely for people to pay for services that they once got for free.
One is that Apple, Google and others have made signing up for subscriptions on apps a friction-free experience, no longer requiring entering a credit-card number.
The other is the growing perception that ad-supported free platforms turn the customer into the product. “I think the general populace is waking up to the fact that, wait a minute, I don’t want to be fueling these giant engines that don’t have my best interests at heart, in many cases,” he argued.
What Will Customers Pay For?
Several PFM companies are looking to move beyond well-established features to innovations for which customers might be willing to shell out subscription fees. These innovations include:
Access to advisors. In recent years, some PFM companies have begun offering customers access to personal advisors, as a valuable service they can’t get from mere budgeting tools. One ironic example is Betterment, which built its reputation as a low-cost “roboadvisor.” Recently, it introduced a premier tier that offers “unlimited support” from a human advisor.
The problem with this model, however, is that human advisors are expensive to pay, and can only handle a given number of client interactions. The Betterment premium service, for example, requires $100,000 minimum balance to qualify and charges a 0.4% annual fee, severely limiting the number of Betterment customers who could afford to sign up. Agostino suggested that a lighter-touch model might succeed, in which the majority of financial planning advice would be automated and supplemented occasionally by a session with a human advisor.
Artificial intelligence. Inevitably, the development of artificial intelligence suggests a powerful way to automate both data-crunching and customer interaction. Cleo is a UK-based app that has mostly focused on the U.S. market; it bills itself as “AI meets money.” Aimed at Generation Z, Cleo is chockablock with emojis, and invites users to ask the app to search through their finance in “roast mode” (tell me what I’m doing wrong) or “hype mode” (encourage me). The company has raised nearly $200 million in venture capital funding, and points to a coming tide of AI use in personal finance apps. Banks may not have the technological prowess to deliver AI advice, but could likely partner with fintech companies to serve customers.
Read more:
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Customization. While Mint and other early players had useful tools for setting goals like college savings, they didn’t really allow for easy planning around alternative situations, such as a divorce or a work sabbatical.
As part of its subscription service, Monarch offers couples the ability to sync up their financial lives, which Agostino describes as a popular attraction. “Oftentimes in households there’s one person that does the money and someone else that doesn’t,” he says. “It’s often a source of tension. We hear this all the time where people are like, oh my God, this is the first time where we’re on the same page about what we’re doing and what our financial priorities are. And we’ve stopped fighting about money.”
James Ledbetter is the editor and publisher of Fin, a Substack newsletter about fintech. He is the former editor-in-chief of Inc. magazine and former head of content for Sequoia Capital. He has also held senior editorial roles at Reuters, Fortune, and Time, and is the author of six books, most recently “One Nation Under Gold.”