Aaron Patzer: Timing Is Everything
Mint.com creator Aaron Patzer contends that banks still don't really understand what customers want -- which is why he's leading the personal financial management revolution.
Fears about disintermediation -- whether it involves untraditional competitors, emerging delivery models or new regulation -- have often caused banks to resist or underestimate financial innovations. That explains the tentative response many institutions have had to the boom in personal financial management (PFM) solutions that has occurred over the past several years. But according to Aaron Patzer, it's just not in bankers' collective DNA to confront the issues that inspired him in 2005 to create Mint.com, probably the most successful of the PFM plays.
Patzer, who became VP and general manager of the personal finance group at Mountain View, Calif.-based Intuit following its 2009 $170 million acquisition of Mint, says consumers are looking for better and more automated ways to understand and manage their personal finances, but that this has little to do with building a stronger relationship with a bank. "People don't want to be stuck just with one bank," he says. "Banks are in the mind-set of, 'We need to get increased share of wallet,'" developing their branches, ATMs and other channels "in a way that people get locked into the system," he adds. But consumers want almost the exact opposite, Patzer argues, noting that this is what PFM addresses. "You want to choose the best financial product in each particular area, and then tie it all together," he says. "This was eye opening for banks. It scared them a bit because they feel they're being disintermediated."
Capturing Consumers' Hearts and Minds
Sometimes it's more about hearts and minds than cold hard cash. "Mint hasn't gone into the transactional realm; banks still offer the transactional capabilities, they hold the money," Patzer acknowledges. "But PFM is becoming the front end of the banking system. This is good for consumers -- it gives them a more in-depth picture of their money and what they could do with it," instead of the balance information and marketing pitches that banks typically push out to their customers. This is more than just hype: Since Mint was acquired by Intuit, it has grown by a 250 to 350 percent annual rate in users and revenues, according to Patzer's LinkedIn page.
Why don't bankers understand this? Why did it take a 25-year-old entrepreneur (albeit one who was an IBM employee with degrees in computer science, electrical engineering and computer engineering) to develop a successful PFM solution? "Unfortunately, the problem is that banks are not technologists," Patzer declares. "They are not oriented to delivering compelling consumer products on the web. They might be good at delivering compelling financial products, but with some exceptions ... the kinds of people who can produce the kinds of experiences an Apple, Facebook or Google does don't typically work for banks." Mint's success is not just about drive and determination, Patzer concedes.
Consumer uptake of PFM tools no doubt was influenced by the disrepute that has clung to much of the banking industry in the aftermath of the subprime meltdown and subsequent financial crisis. "The financial crisis in some ways was the best thing that happened to Mint," Patzer says. "It was not just the backlash against banks, but also, people started thinking, 'I need to really understand where my money is going.'"
Today, Patzer is focused on growing Mint geographically beyond its current presence in the U.S. and Canada, as well as expanding PFM to other platforms and capabilities. And with all the buzz about NFC-based mobile wallets, he spies another potential target: "We can play a big role in that," Patzer says of the mobile wallet space, adding that the current offerings "just tell you what you have, not what you should be paying [or] ... how to manage your money. It's an infrastructure layer -- just a replication of your existing wallet."
In addition to his role at Intuit, Patzer is an active investor in start-up technology companies. How does he decide where to invest? "I look for three things," he says. "Does it solve a real problem? Is it in a large, billion-dollar market? And do they have something sustainable -- some kind of great technology no one else has developed or a network advantage?"