23/06/2011

Finance gets personal

By Michael Tinmouth, Entrepreneur Country Editor

Does the net hold the key to tackling record personal debt levels?

Personal debt is always a big issue in a consumer driven society but never as high profile as during a recession. In February the coalition government announced a u-turn on the continuation of funding for debt advice services such as the Citizens Advice Bureau for a further year.

The decision to grant an additional £27m in funding up until April 2012 followed figures from the Insolvency Service showing that a record number of people were declared insolvent in England and Wales in 2010.

In total there were 135,089 people declared insolvent in 2010, up 0.7% on 2009 and the highest since records began in 1960.

But there were some encouraging signs however with a 13.6% drop in the last quarter of the year compared with the same period in 2009 and also a 23% fall in the number of companies going bust in 2010.

Debt Problems

The record number of personal insolvencies for 2010 represents a doubling in number since 2005. Commenting via his website, Martin Lewis, MoneySavingExpert.com creator, says: "Never has the country needed to provide decent debt help more. Over 135,089 people were declared insolvent in 2010. Debt crisis and bankruptcy don't tend to hit until after an economic downturn, and that means right now we expect peak demand, and it won't get better for a long time."

Currently as much as 80% of the UK market is unserved by any form of financial advice, they don't know their bank manager and they don't have an IFA. With government coffers running empty, many individuals facing debt problems have turned in recent years to web based services, including advice forums and only the most basic personal finance tools.

Until recently however, UK-based online tools have remained simplistic and lagged behind popular US services such as Mint.com. The complexity of regulations surrounding persona finance and continued user uncertainty over data protection and storage has meant this is a potentially vital service and lucrative market that has remained untapped in the UK.

Technology helping empower better personal financial management

The first major UK online personal finance application Money Dashboard looks set to take the web by storm after launching in January this year following the completion of a successful beta testing process.

The Edinburgh-based Money Dashboard provides a simple online solution for time-poor consumers who struggle to keep track of spending and income. By aggregating balances and transactions from multiple online bank accounts brands and credit cards brands in one secure view, Money Dashboard gives users a clear picture of all their accounts in one place.

Levels of demand for the application have consistently exceeded expectations and the first round of beta testing was over-subscribed, despite the release of thousands of extra places.

Serial entrepreneur Gavin Littlejohn, founder and CEO of Money Dashboard believes that the Government's austerity measures coupled with the ongoing impacts of the recession have forced the public to look for ways to save and manage their finances more effectively.

He says: "The UK consumer has shrinking access to financial advice, with few people either knowing their bank manager, or having an independent advisor from the professionally qualified sector. More and more people have realised that with reduced access to credit and with the impact of government austerity measures that they really have to sit up and take control. Money Dashboard is a product that will take a lot the fear and hassle out of managing on a tighter budget. Since we are independent of banks and building societies, our priority is always the consumer and helping them to make the most of their finances."

Users can access the Money Dashboard application from any computer with web access, enabling them to track and categorise spending, set budgets and help them save. It can also be configured to send emails to warn users if they exceed their set budget or are about go into overdraft. In future, it will also be possible to alert users to suspicious transactions on their accounts.

Since the service opened for public beta testing in May 2010, it has helped 10,000 users to manage their money more effectively. Feedback received from beta testers has informed several rounds of improvements as part of the product's evolution with impressive user feedback.

Is data security an obstacle to wider online financial services?

One of the perceived major obstacles faced by online personal finance applications such as Money Dashboard and Mint.com is continued public mis-trust of online data storage and protection.

Money Dashboard has sought to reassure customers of the importance it places on security and privacy and promotes that its service is read-only and does not store any financial user IDs, passwords, sort codes or bank account numbers. Personal details and transaction data are stored separately and are heavily encrypted. Data services are supplied to both Mint.com and Money Dashboard by Yodlee, world leader in bank aggregated data, handing over US$3 trillion of bank data balances every day from the accounts of 27 million consumers, and powers the internet banking of 42 out of the top 50 banks in North America.

Speaking recently at the Entrepreneur Country Forum panel discussion on personal data security Gavin Littlejohn, CEO of Money Dashboard highlighted the increasingly important role which web-based financial services are playing in the UK . "Despite media driven fear surrounding data security, there are now 25 million registered internet banking users in the UK, making personal finance second only to social media."

What next?

With users already familiar with managing their bank accounts online it would seem that the UK market is ripe for the introduction of an increased diversity of personal financial management services. Where Money Dashboard is creating massive interest is in its user-centric delivery and powerful technology platform.

With the full scale of the personal insolvency crisis in the UK only recently coming to public attention the market for online services is likely to boom, Money Dashboard being in the enviable position of holding both strong market share and increasing user driven development and support.

Please visit: www.moneydashboard.com

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