Anne Truitt Zelenka

As you may have heard, personal finance startup Mint won the TechCrunch40 top prize. Mint is like an online version of Quicken. Just like with Quicken, you set up accounts and can automatically download transactions from your banks. Mint will automatically categorize transactions so you can run reports to see where your money is going. And it constantly searches for deals on credit cards and bank accounts. This is where Mint intends to make money — they’ll earn a commission from suggesting these deals.

Big opportunity for Wesabe and Mint: The daily visit online

The big opportunity for Mint and its competitor Wesabe may not be in reproducing everything that Quicken does. They should look to become a daily stop on a person’s web tour, providing a view of balances and transactions, showing budgetary decisions and progress, and so forth, and even giving access to a community of like-minded financial friends, which Wesabe has already started offering.

Rafe Needleman suggests Mint is incomplete without online bill pay and tax help. But you pay bills maybe twice a month and do income taxes even less frequently. It’s the day-to-day visits that matter for an ad-supported service like this, not more infrequent ones. Bill pay and tax are not easy to build — focusing on that could divert these small startups’ precious resources.

Personal finance without checking account reconcile?

Wesabe isn’t trying to reproduce what Quicken does in its entirety. Wesabe doesn’t do account reconciliation because, according to one of the co-founder Marc Hedlund, less than 1% of people he’s spoken to actually do that. Marc suggests that if you’re checking your accounts on a regular basis you don’t need to do reconciliation because you’ll find any discrepancies soon after they happen. That could be true.

I actually don’t enter my receipts by hand any more into Quicken; I just download them and reconcile when I get the statement. The kind of reconciliation I’m doing therefore may not catch bank mistakes, which is one of the main reasons someone might do it. I think if I started using Wesabe to check my accounts on a daily or almost-daily basis I wouldn’t even feel the need to reconcile.

But neither Wesabe nor Mint solves the difficulty of categorizing transactions

I have some doubts about how well Mint might work in accurately capturing spending patterns. The automatic categorization that Mint promotes isn’t going to do anything with my many transactions from Target that need to be split across groceries, clothing, and other categories. But Quicken isn’t any better; I have to enter that by hand. Wesabe’s social approach doesn’t help either. Only Target and I know exactly what I bought… and Target ain’t telling, except on my paper receipt.

But do most people even want to check where their money is going every day? I run reports on my spending habits on Quicken only very rarely. On the other hand, I check my various account balances and transactions a few times a week. Maybe the focus on categorizing transactions and tracking spending is yet another nice-to-have.

What might happen

Without the ability to accurately categorize spending, these services only offer a one-stop place for checking account balances and transactions. Maybe that’s good enough to kill Quicken. Even though I’ve consolidated as many accounts as possible under one roof — we have our banking, brokerage, and IRAs at Charles Schwab — I still have credit card accounts, 529 plans, and a health savings account at different institutions. If I had one reliable page to check on all these at once, I’d probably visit every day.

In fact, I might set up Wesabe to see how well that works. Wesabe beats Mint for now, because you keep your account login information on your own computer instead of on their servers as Mint does.