There are a bunch of personal financial management (PFM) tools on the market but in my view they all suffer from the same failing - they're all backwards rather than forwards looking. Of course, there is a reason for that, integrating a PFM with online banking and delivering information based on historical spending patterns is a relatively trivial engineering challenge. Creating a PFM that intelligently offers insights into an individual's future financial position is far harder.
MoneyStream, a PFM offering coming out of stealth today, hopes to be the first company to crack the code. Interestingly, MoneyStream is also announcing a strategic $3.2 million Series A investment by none other than global tax agency H&R Block. If H&R Block's involvement is anything to go by, this is a startup that is well worth following.
MoneyStream hopes to cover off three distinct areas in individual's and families' financial lives:
- Giving Better Visibility and Control
- Integrating a Disparate Financial Ecosystem
- Putting the User’s Interest First
It does this in several ways. MoneyStream delivers a calendar-based interface that is aimed at helping articulate the future financial position story. MoneyStream ensures data quality, even over a complex financial ecosystem by connecting and aggregating data from all of a user's accounts - deposits and bills, as well as payments in transit. Finally, MoneyStream aims to give ultimate visibility over upcoming payments by using a graphical bill calendar and auto-reminders.
The secret sauce, if it exists, lies in the application of analytics to raw data - after a customer connects their bank account, credit card and biller accounts, MoneyStream uses predictive algorithms to automatically scan all the transactions in order to detect and predict upcoming bills and income. It organizes all of the information and displays it in a graphical calendar, with alerts in place to monitor anything unusual.
I took the opportunity to chat with Mike Bertrand, the CEO of MoneyStream, about what they're doing. His perspective on the PFM space is that the other solutions do a great job of looking into the past. Bertrand went on to say that, in his view, painting a pretty picture of the past doesn't neccessarily mean that a user is in control of their finances. Bertand's take is that individuals can't cognitively look forwards and backwards at the same time - hence the reason for MoneyStream's calendar paradigm. The key value that MoneyStream is pushing right now is the avoidance of late payments and overdraft fees. By analyzing historical regular payments, MoneyStream assesses when payments are likely to be due and alerts a user when their bank account isn't likely to cover those payments. It's a way of extrapolating out historical transactions to intuit what will occur in the future.
Bertrand pointed out that in an enterprise setting if an organization had a few dozen vendors with different billing and payment cycles, they'd be sure to have a system to keep all that in check. In the consumer space, however, no such system exists. That's what MoneyStream wants to be.
In terms of monetization, MoneyStream is looking at future opportunities, the company has started thinking about how they play in a broader finance ecosystem. I put it to Bertrand that by giving deep visibility into consumers short-term cash position, they could highlight when there is a period of excess cash. It would then be easy for MoneyStream to channel that spare cash to a short term investment service for example. MoneyStream customers could earn an arbitrage on money in their accounts that is stagnant. All that is in the future however.
For now MoneyStream is focused on building out its product and scaling its customer adoption. They're already seeing some good metrics. Bertrand told me that with their users who have been on the system for over 120 days, the 30 day active rate is over 70% - that shows a stickiness which is unusually high for a PFM - perhaps a tiding of a good future?
MoneyStream certainly has experienced execs on board. It was founded in 2012 and has, among its co-founders, veterans of Intuit.com, Apple, Nest, Yahoo and Netsuite. So they certainly know their stuff. This and the fact that H&R Block seems very bullish about their opportunity means that, at the least, they're a player to keep watching.
