Wesabe Shutting Down its PFM Operation

Wesabe, one of the several PFM providers that started a few years ago has decided to shut down its PFM operations on July 31st, 2010. The Groups tab, which hosts discussions on personal finance topics, will remain online indefinitely.

I am sure few other PFM providers, perhaps not as well known, have closed shop because of a lack of a viablew business model. There was clearly a glut of PFM providers in the market, as is the case with any upcoming business model that generates a lot of buzz. Most of these providers opened with an ad-supported model. It is a difficult model simply because it requires a scale which is not easily achievable and requires significant brand building and consumer loyalty. Mint did to some extent and was quickly acquired by Intuit. Geezeo quickly adapated its business model and started offering its services to banks and credit unions and looks like they are doing reasonably well. Although I am not quite sure how their business model will scale by selling mostly to smaller institutions, especially if they choose to service these clients directly.

I think Wesabe failed because of its reluctance to commit to a revenue model. They steadfastly refused to support its business model through Ads. Fair enough- but in that case, I don't understand how they could continue to offer a "free service" to consumers. They did dabble with offering their services to financial institutions. They posted their pricing online and tried to make it very simple for banks. Unfortunately, that's not how most decisions make their buying decisions. It is a lot more involved process. While simplicity and ease of integration are good marketing messages, I suspect they went too far with it.

It remains to be seen how this space will play out over the next few quarters and how some of the new players such as bundle.com and hellowallet will position themselves against the existing ones.