‘The market is really crowded’: Anthemis Group’s Jillian Williams on tough times for personal finance apps

To many consumers, financial technology is synonymous with the concept of personal finance management, or industry speak for managing one's spending habits -- PFM for short. It's a space that started out with Mint ten years ago, with a new way to look at all of one's finances in one place. The field has now grown to accommodate an ever-expanding number of direct-to-consumer PFM apps, including apps like Digit, Clarity Money, Penny and Qapital, and banks are now folding PFM capabilities into their mobile apps. To venture capitalists, PFM has become somewhat of an over-hackneyed phrase, with questions looming about how these platforms will generate revenue over the long term. "I am very wary of 'basic' PFM tools that don't have clear differentiators in the market," said Ryan Gilbert, a partner at Propel Venture Partners. "Most PFM apps seem to be doing the same things." Tearsheet caught up with Jillian Williams, an investment associate at Anthemis, a venture capital firm that invests in early-stage technology companies for financial services, about tough times for PFM. The following has been edited for length and clarity. Banks have been folding in PFM features and competing apps are having trouble differentiating. Where do you see the PFM market right now? A lot of PFM will continue to move to a business-to-business, or business-to-business-to-consumer model. Things [business-to-consumer PFMs] struggle with are being able to monetize and with customer acquisition. What's the problem with business-to-consumer PFM? The market is really crowded and it's hard to provide that extra value to really distinguish themselves from other platforms in the space. It's like a little feature that one has versus the other, but those are features, rather than standalone platforms and they're not really defensible on their own. Consumers are fickle, and if you're not providing them with extra value or some sort of insights the first couple of times, they just move on. PFM companies have struggled to monetize no matter how much these customers enjoy it -- take Digit for example: when they started to charge people, despite how much people loved the platform, that's when customers started to move away. So banks will take on PFM where startups can't? [For banks], PFM can give you insights into how you're spending your money and can change the way consumers view banks. Putting [mobile banking and PFM] together can benefit banks with more insights into where customers' priorities are in terms of savings goals. If PFM is such a difficult business model, why do VCs still fund them? One reason they could still be funding them is that the business-to-consumer space in fintech does have a huge opportunity, and in most technology sectors, that's the most sexy space that you want to be in. PFM is the most notable space. For example, most people you speak to will know what Mint is. So VCs are swept up in the romantic idea of being able to give more people access to financial services, and PFM is a way to do that? I would agree with that you, but I see VCs moving away from it a lot more. There is that idea that there's an opportunity to improve inclusion and awareness. Some investments have persisted, especially when you find someone has this different edge. Could robo-advisers start taking on PFM capabilities? You see a lot of robo-advisers not becoming PFM platforms, but becoming all-in-one solutions to see all of your finances. What's next? I could see some consolidations, and a lot of pivoting, and some will probably shut down. It's becoming a crowded space that's unsustainable. I don't think [PFM] is going to collapse, but there's not much room for new entrants. I think there's definitely room for some [PFMs] in market to grow, but it's not a market where there's much opportunity for new entrants unless there's a really new hook.