Trend Highlight – New Banking Built on Old Tools
In the realm of personal finance, fundamental needs have remained constant: avoid running out of money, save for significant expenses, and manage financial resources efficiently. However, the tools and interfaces used to address these needs have evolved considerably. A notable example of this evolution is the transition from traditional word processors like Microsoft Word to modern in-browser applications. Grammarly, for instance, capitalized on this shift by developing a spell-check extension that integrated seamlessly into web browsers. This strategic move allowed Grammarly to build a business worth over $1 billion by leveraging the changing interface of digital writing.
Similarly, while the core problems of personal finance have not fundamentally changed, the tools and interfaces used to manage them have evolved. One such tool that has gained unexpected prominence is Google Sheets. Initially designed as a spreadsheet application, Google Sheets has become a versatile platform for a variety of non-spreadsheet tasks. Its adaptability and universal accessibility have turned it into a “digital duct tape,” effectively addressing diverse needs from project management and budgeting to investing and even everyday tasks like grocery shopping or watering plants.
This widespread adoption of Google Sheets for unconventional purposes has led to the emergence of innovative financial tools that harness its flexibility. Tiller, for instance, offers a personal finance solution that integrates directly with Google Sheets. Users can connect their bank accounts to Tiller and manage their financial planning and organization within a familiar spreadsheet environment. This integration leverages Google Sheets’ adaptability to create a user-friendly financial management experience.
Tiller’s pricing model is also designed to align with the value it provides. By offering a free one-month trial, Tiller encourages users to invest time in customizing the product. Once users experience the benefits of a well-organized financial plan, they are more likely to subscribe to the annual plan, which costs $79. This pricing strategy leverages the sunk cost effect, where users are more inclined to continue using the product after investing time in setting it up.
In addition to Tiller, other companies have used Google Sheets creatively to attract users through clever SEO strategies. Smartsheets, for example, has created various Google Sheets templates that rank highly in search engine results for terms like “Google Sheets budget template.” Many of these templates contain links back to Smartsheets’ site, effectively driving traffic and potential customers through high-ranking search results.
Trend Highlight – A New Way of Reaching Finance-Oriented Consumers
In the competitive landscape of personal finance tools, companies are continually seeking innovative ways to attract users. Truebill, a personal finance management tool, has adopted a unique strategy to reach potential customers. Instead of competing for broad, high-competition search terms like “personal finance,” Truebill focuses on ranking for specific, problem-oriented queries such as “how to cancel Instacart” or “how to cancel Equinox.”
This targeted approach addresses a common consumer pain point: managing and canceling subscriptions. As businesses increasingly adopt subscription-based models, consumers’ bank statements are often cluttered with recurring payments. Truebill capitalizes on this trend by offering a service that not only helps users track and manage subscriptions but also negotiates better rates on their behalf. The company takes a share of the savings achieved through these negotiations, providing users with an incentive to use the service.
Truebill’s strategy highlights the effectiveness of niche targeting in user acquisition. By focusing on specific issues like subscription cancellations, Truebill avoids the high costs associated with competing in broader search terms. This approach not only reduces user acquisition costs but also positions Truebill as a practical solution to a pressing problem.
In contrast, some businesses attempt to control the cancelation journey by running ads on search terms related to canceling their services. For example, Hulu runs ads for “how to cancel Hulu” to retain users who might otherwise cancel their subscriptions. However, brands like Spotify and BarkBox do not rank highly for their respective cancellation queries, potentially missing out on an opportunity to engage users who are considering canceling their subscriptions.
Trend Highlight – The Rise of Credit Builder Cards
Credit builder cards represent a strategic innovation in the financial services industry, targeting individuals with little to no credit history. According to the Consumer Finance Protection Bureau, approximately 22% of the adult population lacks meaningful credit history. Credit builder cards address this gap by providing a pathway for individuals to establish or improve their credit scores.
One prominent example is a company that offers a product branded as the “Credit Builder Card.” This card operates as a secured credit card, requiring a $200 deposit that serves as the card’s credit limit. Although it functions as a credit card in terms of reporting to credit bureaus, it effectively operates as a pre-loaded debit card. This design allows individuals without traditional credit histories to build credit without undergoing a credit check.
Credit builder cards are an entry-level financial product that aims to capture a niche market of underserved individuals. By offering these cards at a low entry point, issuers hope to attract users who will eventually upgrade to more lucrative credit products. CreditBuilderCard.com, for example, partners with companies focused on helping consumers rebuild credit, while personal finance lead-generation sites like NerdWallet and Credit Karma aggressively market these cards to first-time credit card users.
The significance of credit builder cards lies in their ability to address the fundamental need for credit access. A good credit score is essential for various financial activities, including securing mortgages, leasing apartments, and obtaining car loans. Credit builder cards offer a valuable tool for individuals to establish a credit history and eventually qualify for traditional credit cards, which can be more profitable for issuers and processors.
Trend Highlight – Cash Envelopes
In an era where payment technologies are designed to minimize friction, the resurgence of the cash envelope system highlights an intriguing reversal. The cash envelope method involves setting a budget, withdrawing the corresponding amount of cash, and allocating it into envelopes designated for different spending categories. This approach contrasts sharply with the frictionless nature of digital payments, which can sometimes lead to overspending.
The cash envelope system operates on the principle that physical cash creates a tangible sense of loss, encouraging more mindful spending. By physically separating money into envelopes for specific purposes, users are less likely to overspend in any given category. This method serves as a psychological deterrent, as using cash feels like giving up something tangible compared to the abstract nature of digital payments.
Interestingly, despite the decline of cash usage, the popularity of cash envelopes is on the rise. Amazon listings for cash envelopes, budget binders, and related products have seen significant growth, with interest peaking during New Year’s resolution season. This trend reflects a broader movement towards budgeting and financial discipline in response to the challenges posed by digital payment methods.
The resurgence of cash envelopes can also be attributed to changes in interest rates. In the past, holding cash could be costly due to high interest rates on short-term certificates of deposit. Today, with bank accounts offering minimal returns, the cost of holding cash is less significant. As a result, the focus has shifted to managing spending behavior effectively, and cash envelopes offer a practical solution for individuals seeking to control their budget.
Conclusion
These trends demonstrate the dynamic nature of personal finance and the continuous evolution of tools and strategies used to manage financial resources. From leveraging familiar interfaces like Google Sheets to innovative approaches in user acquisition and financial product design, the personal finance industry is adapting to meet contemporary needs. Whether through targeted search strategies, niche financial products, or traditional methods with a modern twist, these trends reflect the ongoing quest for effective financial management in an ever-changing landscape.