Google Personal Finance?

While going through my bank account just recently, I realized how lousy I am at managing my own finances.  This is quite weird considering that I confidently and happily do so as part of my job at GFI Software. And yet I must admit I was never that good at tracking, budgeting and forecasting my own expenses.

It’s time to admit it that I needed help! And as usual I turned to Google to help me find the software I need.

I immediately found that the top two personal finance and budgeting software solutions are MS Money and Intuit Quickbook. As I tried to download MS Money from the Microsoft website I saw that the trial download was only available for U.S. customers – something that is quite an issue for me considering that I reside in Malta.

Malta is a little island in the Mediterranean, so small that I doubt I am going to see a version of MS Money for Maltese customers any time soon. (You can find more about the fantastic island of Malta at http://www.visitmalta.com)

Anyway, I checked for a European edition of MS Money which unfortunately doesn’t seem to exist. This led me to look at Quicken which unfortunately yielded the same results: Intuit only have a U.S. version of the software.

This led me to return to Google search to find a different software package! There are hundreds of packages out there – I definitely won’t be evaluating all this software as I have better things to do in my own time.

One personal finance tracking software – or better said, hosted service – was from a company called Mvelopes. While going through the Mvelopes website and checking out its features, a question popped in my mind! Does Google have something similar after all? I was quite sure that they didn’t but I couldn’t resist checking,   hoping that I would be surprised. Unfortunately, as expected, no surpises there; however, all of a sudden my mind switched context!

I am a dreamer! A hopeless dreamer! In a split second I ask three hundred thousand questions to myself, come up with the same number of answers and build a concept idea and a vision! Most of it is based on gross assumptions, silly ideas and a wandering mind.

I was no longer interested in finding software to help me in my quest. I just wanted to spend time thinking about why Google don’t offer this service, what if they offered it and how they would do it.
Wouldn’t it be a great idea were Google to offer personal financial tracking software to allow users to do expense tracking, budgeting and forecasting? To do so, Google will need to build trust from its users, though to be honest I do not have any insight whether users trust Google or not. Then again, how important is trust for end-users really? I strongly feel that nowadays most users are ready to compromise security for functionality and ease-of-use; but then again, this is a topic for another blog post.

I would imagine that if Google had to offer a personal finance hosted service they would eventually integrate it with ‘Google Checkout’ and ‘Google Finance’; specifically, ‘Google Checkout’ would be a feature of the personal finance tracking service.

Build or Buy?

Would Google build or buy the service? What is required to build great personal finance software?
For certain, good software developers with experience in web development technologies are required. However when it comes to product management, it being a finance service, the team must include experts in financial and banking services.

Apart from the actual development, strategic relationships with financial institutions are neededin order to offer a certain level of integration between the personal financial software and the financial institutions themselves. This will allow users to import their account balances, mortrages etc, from their bank. If users have bank accounts with multiple banks then it should allow them to import them all their data and therefore combine all their accounts.

I do not really know how much time and effort it takes to build these relationships but, relationships being relationships, it probably takes lots. According to their site, Mvelopes, a hosted personal finance software services, supports 12,968 financial institutions; Microsoft Money also supports thousands of institutions.

So should Google build or buy? Offhand I would say buy, especially if there are acquisition targets that have a good hosted solution with the proper relationships set up. That way, Google should have a faster time-to-market and give it enough breathing space to tighter the service with its other offerings more tightly.

As a small note, maybe Google should look at Mvelopes.com!

Monetizing the service

How can this service be monetized, always keeping in mind that typically Google doesn’t charge the end-user? I see three possible ways.

Plain Old Advertising

Google can continue building on the advertising concept.
Now by that I do not mean putting up AdSense ads on the service. A personal finance service would typically be something very private and I doubt end users would like to see ugly white ad boxes near their financial statement.

Google can offer integrated links within the service itself from where they can offer targeted services. They could open these links to thousands of financial institutions such as insurance agencies, etc. Financial institutions would then bid to place link text ads within the user’s session.
Google could be paid per click, or else, per quote! Google could create standard forms where end-users can submit their query which would be sent to the financial agency in order to generate quotes etc. Google could potentially also get paid by quotes – quotes should cost more than clicks to the financial institutions since an end-user filling up a quote form would indicate immediate interest.
Although this could generate revenue for Google I do believe that implementing such a system could mean a lot of revenue opportunities lost.

Reselling Services

Another way for Google to actually generate revenue would be on a commission basis.
Google can build strategic partnerships with a handful of financial institutions – based on geography and type of services.

They would not just get paid on a pay-per-quote but they could resell the financial services themselves, still keeping the financial institution brand, and then get a thin slice from the sale. Essentially, Google would act as sub-agents for the financial firms. An advantage of working with commission is that Google would have the actual data and could then track interest into these services.

This intelligence would be needed in order to build a strategic plan to move to the next level of monetizing this service.

Google itself being the financial institution

And what if Google had to take it a step further and aquire a financial institution and provide the services themselves effectively building a full-blown financial services division within Google?
How would Google go about aquiring a financial institution? Would it buy a large institution or a smaller one?

I am quite confident that aquiring a large financial institution would be prohibitatively expensive. Such a company would also most likely have a lot of fat and beaurocracy. The price would probably include a brick and mortar reseller network and also the actual brand!

Staff integration from an HR aspect could be a challenge and probably it would lack the business agility that Google would need in order to start selling the service through online means.

One other strategic disadvantage would be that Google will risk pissing off the other big institutions - and these are enemies you wouldn’t want – at least till you are ready to take them head-on.
Maybe a smaller financial institution would be something that Google should consider in this case. The acquisition cost would be cheaper and therefore Google will be mitigating the risk in case the whole strategy goes bad.

If paying for a small institution they should concentrate on buying a firm which has a lean and agile management team; it should be a management team that is easier to sell the Google philosophy to, eager to take risks and ready to live on the edge.

The reseller network would probably be much smaller than the bigger financial institutions but that should not be an issue since the long-term strategy would be to sell online anyway.

Back office operations would also probably be easier to integrate with the new Google personal finance service – this is obviously criticalto the success of the whole project.

A smaller firm would also allow Google to stay under the radar and therefore not to cause panic in the financial industry. This would give Google more breathing space and allow them to test the new service without having to spend too much time on competitors.

Next

So will we be seeing any related news any time soon? I do hope so, as I still need to get back control of my own finances.

Credits

Thanks to Angelica Micallef Trigona for her editing skills

Comments

[Dave Hanson]

Take a peek at http://www.moneydance.com. Works great for former Quicken users.

[Nick]

So when can we expect the next post? :-) Its been a while mate!