The Problem with Dashboards

 The personal finance dashboard has become a well-recognized tool since Mint appeared in the late 00s. That said, it is not the powerhouse that I think many expected it to be. My view on this is informed mostly on the information coming from Mint and the new competitors in the space.

Mint boasted ~15 million users in its marketing materials in 2023. All indications were that the company really had 3-4 million active users (people who accessed their accounts on at least a semi-regular basis). That is a big gap! Many other budgeting and personal finance apps were built in Mint's wake but few ever achieved this scale. Mint was shutdown by Intuit in early 2024 and so there has been a scramble to collect those customers by new and existing players in the space.

January data on SimilarWeb indicates a surge in visits to Mint competitors with Monarch Money, a company founded in 2018-2019 by Mint's former head of product as one of the winners with 3.9 million visitors.

Here the problem...

1. Information is not knowledge - A dashboard full of data is more convenient than a bunch of different platforms that need to be visited one at a time. But, a read-only database of information is not necessarily actionable not is it really any easier to use given the lack of context generally associated with the information presented.

2. DIY - Most budget and personal finance apps fall short for the truly motivated who DIY this with excel. The general flexibility and usability of (still) the best business software created is far superior when the goal is to aggregate data and manipulate it within a closed environment.

3. Work - This is a lot of work. In essence, though there may have been some growth in the overall number of customers using personal budgeting and finance apps over the last 10-15 years since Mint was launched, I don't think anyone would argue that we've seen a significant adoption of these platforms. They are too much work, which is why there was such a huge gap between the number of users at Mint and the active users. I had an account at Mint but I never used it. Once in a while I would go back in to look at what it said and the mere idea of trying to update made me close it back down. I think that for the wealthy, the HNW families as they're called in the finance world, these dashboards are just another set of to-dos that are ultimately not particularly rewarding. 

And why should an interest in personal finance to high financial literacy be the bar? Most people want to do their jobs or sit on social media, or be with their family, etc. The idea that you cannot be financially efficient and successful without being educated and engaged seems like a bar that is too high for many, particularly when the idea is that you have to spend at least a few hours every month slogging through this information even when aggregated.

Dashboards are one step forward but one step too few to be really useful. The user statistics bear that out I think.

Financial Supply Chain - Asymmetry in Action

 For anyone interested in business, supply chains are an important concept. 

The traditional idea takes you to a large field in the middle of nowhere, to find a huge building churning out whatever. Taken to the next step puts you (probably) on a plane to many parts of the globalized world to find the raw materials that make up the inputs for the factory you just left.

Though it looks quite different, there is a supply chain for financial products. Instead of smokestack factories however, it is composed mostly of people sitting on high floors of buildings in major cities (e.g. lawyers, financiers, regulators, and more lawyers). 

Just like in traditional manufacturing, every link in that chain adds cost to the product that is being sold. 

Just like in traditional manufacturing, these products must be sold for a profit (calculated as cost+ or some other methodology).

If this is true, then the price that is charged for the product must be influenced by the cost. The difference in financial services is that there is a variable revenue stream in many cases. 

As an example, a mortgage costs $X to put together. If the bank wants to make a 10% margin, then it sells for $X*1.1. But the revenue that the bank makes is based (mostly) on Net Interest Margin (NIM), which is the difference between the rate they pay on deposits and the rate they can get from (in this case) this loan. The price of a mortgage is just all the projected future cashflows discounted back to today, using (again) interest rates to do the discounting. 

You can see that if the supply chain were cheaper (had fewer steps or was more efficient at each step), then the price of the product would be lower, which in turn would lower the price that the bank would need to sell it for. In essence the supply chain, just like in traditional manufacturing, influences the price of the product irrespective of market conditions. It is also reasonable to assume that this only hurts consumers - that is when the product "should be" cheaper, banks do not let the price fall whereas when the product "should be" more expensive they let the price drift to "market levels."

"Hey Siri, define 'asymmetry'"