There hasn't been too much social innovation in the financial services sector. Most large banks have taken hesitant steps into the social web. Their reluctance to do so is understandable. As a sector, they have a lot to worry about and the last thing that they'd want to do is take on more risk - especially when their brands are taking such a beating. As a result, the most innovation is happening among the startups. Two in particular really impress me.
The first is
MINT. It aggregates all my financial information from my different accounts whether it be brokerage, retirement or bank accounts. It tells me the categories of my expenditures, my spending trends and gives me pointers on ways to save. But the feature that I find most interesting is the SpendSpace at the bottom of the Trends tab. It lets me compare my spending trends to other people in similar (or different) locations as me. For example, I can compare expenditures in restaurants to other New Yorkers (lower). And more than that, it tells me whether my shopping at specific retailers in a given time period matched others in my location. Apparently, I spent a lot more at Best Buy than others in February. Similarly, my wireless phone bill was lower than other New Yorkers. It is fascinating social information.
The other interesting website is
Covester. It is a social investing website that tells me how other people are investing their money. Harnessing wisdom of the crowds concepts, Covester lets you link your brokerage account to other individual investors and fund managers so that you can see how your portfolio performs in relation to theirs. The idea is that you can discover the most successful investors from within the community and start learning and benefiting from their investment choices. Part of the idea is to enable those with the best portfolio to get some financial return by making their investment decisions public. The only problem - investing is about beating the market. If Covester become so successful that everyone knows who you are and what you're investing in, you won't be able to beat the market in the future.
Nevertheless, Covester is a perfect example of a startup that harnesses the power of the social web. Now just imagine if MINT and Covester were to merge. Wouldn't that be neat? Better still, a major bank in the consumer banking business should acquire MINT and someone like Etrade should pick up Covester.
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