Sept. 25 (Bloomberg) -- Citigroup Inc. has formed a venture with Microsoft Corp. to compete with Mint.com, the personal- finance Web site that Intuit Inc. agreed to buy last week for $170 million, people familiar with the matter said.

Citigroup and Microsoft have spent about $5 million on the project since it was started earlier this year, one of the people said. The venture, tentatively named Bundle, is led by Jaidev Shergill, an executive vice president at Citigroup’s Growth Ventures and Innovation unit, its in-house incubator of start-up businesses. Like Mint, the venture would let users monitor accounts at multiple banks and brokerages.

Vikram Pandit, Citigroup’s chief executive officer, wants to restore his bank’s reputation as an innovator, burnished in the 1970s when it pioneered automated teller machines. After last year’s $45 billion bailout, Pandit may have to justify the cost of each project, said Thomas Noyes, who until 2007 headed Citigroup’s international Internet and mobile-banking businesses.

“A key question to be asked on any investment is what value this is bringing to Citi’s current customers or its current lines of business,” said Noyes, now managing partner of Starpoint LLP, a bank consulting company in Charlotte, North Carolina.

A Citigroup spokesman, Steve Silverman, declined to comment, as did Lisa Gurry, a spokeswoman for Microsoft, based in Redmond, Washington.

Last week, Citigroup said Microsoft helped design Citibank Direct BE, an online-banking program designed for corporate treasurers and financial officers.

MSN Money, Citi Online

Microsoft runs MSN Money, a Web site that displays stock quotes, offers tools for tracking bank accounts and publishes articles and columns on investments, personal budgeting and credit repair. Citigroup’s U.S. consumer site, Citibank Online, allows customers to see accounts, make payments, transfer money and set up alerts to warn when balances fall too low.

Mint, based in Mountain View, California, offers a free Web site that consumers use to track spending alongside account balances. The company makes money by charging financial institutions fees for steering customers their way. Founded in 2006, Mint had received more than $31 million in venture funding, according to an Aug. 12 press release.

Intuit, whose TurboTax software siphoned tax-preparation customers away from H&R Block Inc. branches, said it wants the Mint purchase to “connect customers across desktop, online and mobile.”

‘Real Power’

The Citigroup-Microsoft venture aims to develop its own site during the next one to two years, one of the people said. Both companies want to assure Intuit doesn’t get too far ahead in a business they believe has prospects to grow, the people said.

One limitation of Mint is that it allows customers to monitor accounts, not transact with them, consultant Javelin Strategy & Research wrote in a product review on its Web site in June.

The “real power” of personal-finance Web sites will be “unleashed when banks and credit unions tie these tools into their online-banking platforms,” Pleasanton, California-based Javelin wrote.

Earlier this year Citigroup folded its year-old “myFi” personal-finance Web site into the company’s U.S. consumer- banking operations. MyFi offered features of Mint, such as aggregating account balances from multiple banks and brokerage firms, while also allowing customers to transact.

R&D Lab

Citigroup executives have explored ways to morph their U.S. consumer business into a “Bank of the Future” driven by improved Web and mobile access alongside branches. In a Sept. 16 presentation, Pandit, 52, told analysts that Citigroup was “once a leader in consumer-banking technology,” and “it is our aim to make sure we regain that edge.”

The bank’s growth ventures unit is led by Jeff Semenchuk, 49, who during the dot-com frenzy in the early 2000s started a software company to teach children how to manage their finances.

The venture with Microsoft has recruited Dan Ariely, a behavioral economics professor at Duke University in Durham, North Carolina, to be an adviser, Ariely said in an interview.

“I’m doing research about how people think about money, and what kind of mistakes people make when they think about money,” Ariely, 42, said in a telephone interview. “The question is, can we use software to help people reason better about what they’re doing, give them better information and make sure that the decisions they’re making are the right ones?”

To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net

Last Updated: September 25, 2009 18:29 EDT