Quest for Consumer Why Intuit is buying Mint for $170MM
For those of you that have never used Mint let me give you an overview (for more info see first link below). It is a free service used by 400k-600k users for personal finance. The core of its service is aggregation, where you register your financial (and non financial) accounts by providing your online credentials. Mint then logs in to your account and pulls your balance and transactional information into its online site (service provider is Yodlee). Mint leverages this information to provide services, such as:
- Spending comparison (geographic and income ranges)
- Alerts (against budget, transactions, balances, …etc)
- Recommendations (ie marketing, saving, investing and budgeting)
- Trending, ..etc
Mint.com will become part of Intuit’s Consumer Group, which includes both Quicken and TurboTax products. Intuit’s business case for acquisition rests on 3 tenants:
- Grow consumer portal.. with Mint as the new base. The revenue equation here rests on expanded marketing of Financial services into combined Intuit.com/ Mint.com customer base.
- Mint customers can be sold into TurboTax
- New value added services such as: Card based bill payment (revenue from interchange), mobile, advisory, …
How should Banks respond?
There are 2 central issues for banks to consider: Customer data and customer relationship. Having your customers manage their finances outside of your financial institution is a lost opportunity to add value to your existing relationship. Banks need to decide what services and tools their customers WANT through customer engagement and advocacy. Mint’s demographic seems to indicate that there is a minimal business case for bank investment here. Banks may want to consider “good enough” services for budgeting such as what Wells Fargo provides online (https://www.wellsfargo.com/wfonline/spending).
If consumer surveys point to need for a comprehensive view and portfolio management the vendors such as Yodlee and Cashedge offer these services to banks today. Of specific focus should be small business and wealth. Banks should carefully track trends in these segment as needs are greater (as is customer profitability).
Banks have substantial control over Mint/Intuit success by controlling access to data. Many leading financial institutions have altered there hands off approach to allowing 3rd parties ad-hoc access to customer account information. Banks should require formal agreements with Intuit over data access, and shift costs to Intuit for managing the activities associated with allowing this access. During my time as head of Online and Payment services with Wachovia, over 40% of all ‘Internet’ help desk calls were related to Quicken/Money and a further 30% were related to aggregation. Banks should strategically manage access to their data from a cost, privacy and consumer perspective.
$170MM is 5.5x invested capital of $31MM, and $408/Mint user. Revenue has not been disclosed, but it is assumed that Mint.com is operating at a loss.
2009 has seen other activity in this space, with Apax Partners $571MM acquisition of BankRate (NAS: RATE). Also look for new financial portals coming out in partnership with Microsoft within the next few months.