New startup aims to ‘Trim’ the fat from your monthly spending

Making sense of your personal finance is a lot like flossing — it’s tedious, it’s not what you might call “fun”, but it needs to be done. Otherwise, things start to get messy in a hurry. There are dozens of tools and apps aimed at improving our (occasionally tenuous) grasps of our own finances, but there’s a new service that hopes to simplify the way we interact with our money. It’s called Trim.

The concept behind Trim is dead-simple: sign up, connect your credit card, and Trim will sift through your transaction data to find recurring payments and help you cancel any you decide you don’t want. 

The idea came about when Trim co-founder Daniel Petkevich, who considers himself a pretty financially responsible person, found recurring payments that he wasn’t aware of on his statement, including a renter’s insurance policy for an apartment he no longer lived in. The realization that money was slipping through the cracks every month virtually unnoticed led he and co-founder Thomas Smyth to starting Trim. 

It’s Smyth who likens the practice of getting one’s financials in order to flossing. It’s as unglamorous as it is necessary, but Trim makes at least one aspect of personal finance management a little less painful in less time than it takes to floss (probably — I don’t really know your life or how long it takes you to floss, but it took me all of one minute to get underway).

Once you connect your credit card, Trim’s algorithm sifts through your transaction data to find subscriptions — things you’d expect, like Netflix, Hulu, Amazon Prime and maybe a few that you’ve forgotten you’re paying for or haven’t gotten around to cancelling. 

I know what you’re thinking: is this safe? 

Petkevich breaks it down for me and the short answer is: totally, with the help of Plaid, an API designed to securely handle bank data. Plaid’s raison d’être is to allow developers to access financial data securely, without risk to banks and customers. To connect your credit card to Trim, you simply login to your bank through Plaid and an encrypted read-only token is sent back to Trim. 

While Trim can help you cancel subscriptions you don’t want, it can’t access your accounts directly. No need to worry about attacks on Trim’s servers, either. They’re protected with Amazon Web Services (also used by NASA and the DoD) and 256-bit SSL encryption. Oh, and even if someone was feeling extra motivated and did manage to find a way into the servers, there wouldn’t be anything to steal — Trim doesn’t store your username or password or any other sensitive data. 

“Through these integrations with the banks, they only give read-only access tokens,” says Smyth, “so there’s literally no way for anything to go wrong or weirdly with your account.” 

After Trim’s algorithm has had a chance to parse your transaction data, you’ll get a text detailing your subscriptions, from Spotify to the Wall Street Journal. 

For those diligent folks who keep careful track of monthly statements and expenses, these probably won’t come as a surprise, but it’s certainly helpful to have a monthly breakdown of just how much you’re dropping in subscriptions every month. Those who tend to be a little less detail-oriented with monthly transactions, however, may find something rotten in the state of Denmark.  

Whether it’s LinkedIn Premium charges, a Wall Street Journal subscription, or the notoriously difficult to cancel gym memberships, Trim is good at weeding out the invisible financial skeletons in one’s closet. And while the average person saves about $15 per month ($180 per year) with the service, the current all-time high for unearthed monthly subscriptions is a baffling 95 for a single customer.

Trim is totally free, and Smyth says that they want to keep it that way. Right now, Trim is backed by private venture capitalists and while they may one day consider adding a premium tier that includes more in-depth analysis and financial coaching, he says that because Trim’s service is essentially software that doesn’t cost anything to run, it doesn’t seem quite right to charge people in order to help them save money. Ideally, there will always be a free version — and they mean really, truly free.

“Personal finance is something you can always put off until another day, and we want to make it something you can today just by making it as simple as possible,” says Smyth. “I do think it’s really, really important for us to just spend a minute doing something to get our financial lives a little more in-order, and that’s where we want to help.” 

Millennial MBAs, NextGen FinTech & the Rise of the Micro Conference

Continuing the millennial and fintech discussion, I recently attended the country’s largest (business) student run digital media conference, the Berkeley HaaS School of Business’ PLAY — a show curated by high achiever millennials, in which SoFi and PayPal were major sponsors, where some 20% of the agenda was focused on financial services disruption, and 25% of the exhibiting, pre-funded start-ups proposed some kind of re-invention of personal finance.
My learnings:

  • In an unstructured analysis by Foundation Capital, roughly 3500 fintech start-ups have received funding in the past 10 years, with some 60-70% started in the past 4. This indicates that many new fincos are just now coming out of their incubation and beta periods.
  • To be perfectly clear, SoFi aspires to do away with your old school banking relationships (if you’re a millennial). SoFi’s narrow target allows the company to rely less on lead generation vehicles – a cost and competitive advantage.
  • As a whole, SMB lending is in trouble, and that’s exactly where nextgen fincos are finding opportunity.
  • Lending Tree portfolio extends to medical and educational loans though SMB lending is still its core. The company has loaned $13 billion so far, with $9 billion in just the past year.
  • Credit Karma claims 45 million members – representing a quarter of all US residents who have a credit score. As a partner to lenders, the company is currently focused on facilitating the student and SMB loan process, but counts as well amongst its customers a broad base including top 10% earning individuals such as consultants, lawyers and bankers.
  • The bulk of finco competition resides on the supply front, with many companies competing for traffic and attention – this situation likely to force many companies to focus on a specific niche, and to become brands and product lines within larger well-resourced entities.
  • Lending Club on average reduces the debt load for SMBs and consumers by 7% versus their old loans.
  • Banks for the most part are embracing the fintech newcos (know they enemy), but not so much Sallie Mae which is finally seeing a threat to its student loan monopoly.
  • That said, SoFi has originated $6 billion in student loans so far in 2015, tiny in relation to the $1.4 trillion market.
  • Fintech newcos are developing their own models of risk, with a focus on cash flow and income versus credit score benchmarking. SoFi no longer uses FICO scores as a “blunt instrument.”
  • That said, most established newcos are not using un-tested “wacky” data like social media profiling either – primarily to adhere to regulations and best practices such as Fair Lending rules.
  • FDIC reports show that there’s been a rise in bigger loans above $1 million – up 55% — while small loans (i.e. for SMBs) are down 24%. So the customer base for alternative lenders is growing, with “even young white guy business owners” having trouble getting SMB loans via traditional outlets today and seeking other means of financing versus a past demographic of primarily black and Latino business owners from the inner city and other less affluent geographies.
  • Mobile usability still has a long way to go in fintech, with only a small handful of newcos allowing for account opening via mobile.

My take:

  • Contrary to some naysayers who believe that we are about to hit a fintech bubble, we are not yet at the peak of the next gen finco wave as companies who have been in stealth mode the past 1-2 years are now emerging, with the strongest finding their product-market fit in the coming year.
  • Niche in fintech is big business. Whether it’s taking SoFi’s stance of focusing exclusively on millennials, or addressing a single sector area such as auto loans, consumer acceptance of handling their finances online and via mobile has reached enough critical mass to support these niches.
  • FICO score will be largely irrelevant in next 5 years. While the company has remained under the radar with the Consumer Financial Board, which is too busy attacking the banks to yet look at the underlying flawed foundation/credit bureau underpinnings of people’s financial lives, the fintech newcos are heeding consumers’ pain and addressing it appropriately with their own measures and credit risk models.
  • The success that alt lenders have with SMBs will continue to accelerate as new small business owners discover the advantages of going with non-traditional lenders and the word spreads organically throughout local business communities. As some of these businesses grow into small franchises over the next decade, they will continue to be proponents and users of crowdfunding and alternative lending as their loan size needs increase and in some cases, become permanently disenfranchised from traditional lenders.
  • Mobile is still greenfield for fintech. The companies that figure this out will rule in the next 5 years, regardless of their position today.

While small compared to more formal tech industry events, the PLAY conference is representative of a new wave of bringing tech to a wider audience in the spirit of Dreamforce (i.e. providing substantive sessions and/or high profile speakers at low cost/free tickets) and content curation in which students or “non-experts” are developing independent voices and running their own home grown events versus passive attendance at more established/massive industry events. Panels and speakers tend to be less scripted, if at all, engendering honest and meaningful discussion. While not entirely free from “pay for play,” these under the radar “micro conferences” are at the least refreshing and gaining mindshare as they literally allow everyone to be in the same room, and can be highly insightful when attendees’ and presenters’ guards are down. We’ll be covering more of these organic, niche events in the coming year.

Personal finance tracker Mint brings Bitcoin into its fold through Coinbase support

The personal finance app Mint is now tracking Bitcoin, the company said on Wednesday. An update to the app allows its roughly 14 million users to view their Bitcoin transactions — albeit only those going through Bitcoin wallet and exchange outfit Coinbase — alongside accounts involving more traditional currencies. According to the companies, Coinbase currently supports over 870,000 consumer wallets, making it the largest Bitcoin wallet service out there.

Sequoia leads $5M investment in FutureAdvisor

FutureAdvisor raised $5 million from Sequoia, Keith Rabois and Jeremy Stoppelman to build out its personal finance advising service. The Seattle company makes it easy to get tips on how to reduce fees and taxes, diversify your portfolio and achieve your financial goals.

Receipt tracker Lemon hits 1 million users, adds Mint-like features

Lemon, a personal spending tracker service, has proven pretty popular with 1 million users signing up in less than four months. Now, the company is looking to go beyond just receipt storage into Mint territory with an update that helps categorize and total up spending.

Citi and MSN’s Bundle Visualizes Personal Spending

Bundle.com launched this week a data visualization site for personal spending. The company, founded last June with funding from strategic investors Citigroup, Microsoft and Morningstar, helps users understand how they match up to others in their demographics and locations with regards to monthly household expenditures.

If You’ve Got the Money, KaChing’s Got the Investors

kaching logokaChing, a Palo Alto, Calif.-based startup backed by Netscape founder Marc Andreessen and Open Table CEO Jeff Jordan, launched a web site today that aims to be a marketplace where anyone can access talented investors. With kaChing, people can choose to invest their money according to the trades of investors featured on the site. It first started out as an application on Facebook, which attracted hundreds of thousands of users who managed mock portfolios. Read More about If You’ve Got the Money, KaChing’s Got the Investors