WHO IN THEIR RIGHT MIND would upload all their financial data to a Web site?
This is the question Marc Hedlund finds himself answering over and over again. He hopes the answer will be: lots of people.
Hedlund is co-founder and chief product officer of Wesabe, a personal finance site that does your banking for you.
Instead of simply letting users manage all their accounts in one place, Wesabe ucab track members' spending habits to help them get more for their money. Think, he says, of the way credit bureaux build up profiles on everybody's spending habits and use the data to create marketing profiles. Why shouldn't consumers be able to do the reverse?
The service is part community, part social network, part money manager, part consumer watchdog.
"We started out with the idea of what benefit a consumer could get if we had basically more transparency into the way everybody is spending their money," he says. "Say here's a restaurant, and 90 percent of the time that a Wesabe member goes to it they never go back. It's probably terrible, versus if they come back a bunch."
Similarly, the service is able to show its users exactly how expensive their banking services and credit cards are. It can even maintains profile on small merchants on eBay or Amazon; it takes only four independent transactions for the site to identify a recurring name as a public merchant.
Hedlund believes that the key to making Wesabe – and perhaps other Web 2.0 interactive sites – successful is protecting customer privacy. Hedlund describes their approach as the opposite of Flickr, where you want to publicly identify your photographs as yours. On Wesabe, the service does not store bank account information or passwords. Those are kept on your computer, encrypted, in a client the company designed that uploads only the anonymised transaction data you allow.
"The idea of the uploader is that we don't believe you should simply trust any Web site," he says. "Real privacy is local to your computer, and a lot of the things people are doing with Web 2.0 applications are saying, give us all your data and trust us. The uploader – which runs on Windows and Macs and soon on Linux – takes things that are really private and keeps those on your hard drive." It is, in any case, he says, usually a violation of the bank's terms and conditions for a user to disclose the password, though it's not clear if uploading it counts.
In addition, the software uploads anonymised transactions. "We keep only patterns on the Web," says Hedlund. The service also has what Hedlund calls a "privacy wall", which keeps data separate from user names and other identifiers except when the user is actually logged in.
The database, which now holds some $300 million in transactions, shows some interesting patterns. Amazon.com is the number one merchant – that is, the number one place Wesabe users spend their money. Netflix is number two. Number 20 is overdraft charges.
"It's probably a very wealthy group," says Hedlund, who notes that a lot of the 15,000 people who have signed up so far come in with debt. Showing which banks charge most for overdrafts and other such information "is good for people to be able to see," he says. "It makes the market more efficient."
There are a number of ways Hedlund intends to improve the service. Wesabe will introduce a pro account this summer that will allow increased storage and mobile services like sending transactions into your account via SMS. The site also plans to add the ability for users to share bills in answer to requests from couples and roommates. The company doesn't want ads on its site, but can see a business value in deals that target specific user profiles with manufacturers' coupons, an idea that he knows might make the privacy-conscious nervous.
But, he says, "Everybody has to decide individually whether these benefits are things they want for themselves."
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