From Individual Ignorance to Collective Wisdom
I feel lonely when I visit my bank online. Agreed, there is much I can do when I am there--check my account, get rid of those pesky paper statements, and maybe even enable access on my cell phone. But, the experience offered is significantly impersonal. Banks have transferred the formality of their businesses and their traditional aversion to risk into the online world. Call me paranoid, but, everywhere I look, I see appealing products but I’m not sure if I want junk fees and financial booby traps.
Compare this to how I spend time visiting online bookstores. Again, with nothing specific in mind, I can look at the popular new releases, jump in and experience two pages of a book that I may want, and see what other people think of the book. Who is reading what? What are comparable books? What are my friends reading and what do they wish to buy? I can even compare prices among competing sellers. Being online, with a group of similar, like minded consumers makes me feel secure and I release the grip on my wallet where an impulsive one-click buy is always imminent.
The difference between the two scenarios, of course, is the ability to benefit from the ‘collective wisdom’ of online communities. In his book, ‘The Wisdom of Crowds’, James Surowiecki describes how, under the right circumstances, crowds will make very good decisions and offer excellent advice, often better than those of experts. “Wise crowds”, says Surowiecki, need a diversity of opinion, independent members, decentralization, and a good method for aggregating opinions.
If collective wisdom can work so well when we buy books online, why don’t we use the same wisdom to help us meet our financial goals? Why has financial advice and planning long been the preserve of individual, discreet and often expensive advisors? And, why is online shopping for financial products meeting one's individual financial goals almost non-existent?
So, I was intrigued when, last week, Geezeo.com introduced a financial marketplace allowing users to compare, review and rate banking products–very much in the style of book reviews on an online retailer like amazon.com. Geezeo’s marketplace is obviously evolving. Not all products are on site, the taxonomy is still being figured out and the reviews are small in number. However, the trend is unmistakable. In a few years, I would think, very few people will buy a financial product without looking at peer reviews and ratings.
Consider expense management, as another example. It is very likely that your friendly neighborhood bank allows you to manage expenses online. You can categorize expenses, split them into pleasingly colored charts and even track them over time. But, check out www.wesabe.com and www.mint.com. See the difference? At Wesabe there is a ‘Tips’ feature that funnels advice from other members on how to save money based on an analysis of your specific spending pattern. Tips are supplemented with information from other sources of collective wisdom like Google reviews and yelp. And you can see how much members spend on average, what stores they use and what they think of those stores. You can share goals with other members and discuss their progress. And, if you are really a geek, you can even update expense transactions via Twitter. Apart from some very cool expense management tools (like Quicken and Intuit), Mint also maintains a database of the ‘best checking, savings and credit card offers available’ and recommends the ones that will save you the most money based on your spending pattern.
So how soon will the world of mainstream online banking allow access to online communities? What are the barriers and the risks?
