Microsoft's New Money Machine

Its new financial-planning software and revamped Web site offer users unprecedented convenience -- if they're ready to reveal personal info

By Geoff Smith

I've always considered Microsoft an also-ran in the online financial services world. Sure, its Moneycentral Web site routinely wins awards and its Money financial-planning program competes neck and neck with Quicken. But the heavily promotional Moneycentral lacks the simplicity of Yahoo! Finance. Money, I felt, was routinely bested by rival Quicken, and I believed routine financial services, such as bill payment, were best handled through my local bank's tightly controlled Web site.

Now I'm not so sure. In the last few months, Microsoft has turned up the hype machine for its new XP operating system, but it's also quietly pushing its revamped Moneycentral site and its latest Money 2002 software. While there's no direct link between XP and Microsoft's financial-services juggernaut, the three tools combined sharply up the ante. Together, they are an impressive -- though still imperfect -- piece of work.

INNOVATIVE INTEGRATION.

  Every executive in the online financial-services industry should get a copy of Money 2002 to see what a bottomless research and development budget can produce. Microsoft's tentacles are in virtually every corner of online finance, from banking and insurance to brokerage and accounting. It wouldn't surprise me if some Money users decided not to bother using financial sites that aren't affiliated with Microsoft. Almost every conceivable type of information and service is available through Web links using Money or Moneycentral, and a lot of information can be customized using data from Money.

The software giant's accounting software and Web site have been integrated in ways that no one ever thought of before. For example, when you research a purchase online using Internet Explorer, you can view your bank and credit card account balances or past month's spending in a window on the side of the screen, then drag and drop your credit-card and shipping information into standard Web forms.

Still, some of Microsoft's lofty promises of smooth integration and easy access to financial data are unfulfilled. The company makes a big deal about the benefits of its Passport system for simplifying log-ons to secure Web sites and access to personal data, but separate passwords are required for XP and Money. A third logon and password is required for at least one Moneycentral feature: e-mail payments made through Citibank's C2it.

NO SECRETS.

  Also, Passport raises big privacy issues. It isn't just a harmless tool for secure log-ons. It forces you to give Microsoft your e-mail address, which not everyone wants to share. On signing up, you are hit with a e-mailed sales pitch to frequent shopping sites that accept Passport. And Microsoft tracks your movements online. How it uses that information is an open question.

Passport is only one red flag for consumers. Setting up and using Money 2002 requires another Faustian bargain: To get the benefit of its dazzling tools, you must share intimate personal details of your financial life.

Passport may not be a problem for some people, but others may balk at Microsoft's advice that you upload all your financial data onto Microsoft servers to make it easier to access the information while you're traveling and recover data if your PC is destroyed. Convenient? Maybe. But it raises the question: What happens if a hacker gets into Microsoft's servers? Microsoft discovered a serious security flaw in its servers last year. Could it happen again?

LIFELINE FOR COMPETITORS.

  All these questions are good news for Microsoft's competitors. They're safe as long as Microsoft's financial-services strategy raises doubts about safety and privacy. Even so, Microsoft's latest offerings come at a time when many consumers are going to be upgrading to XP, and looking at ways they can use it more efficiently. Money 2002 is one such option.

Competitors are justifiably wary of this lumbering giant and antitrust violator. The scope of its latest financial software goes well beyond what the neighborhood bank -- or even financial giants such as Fidelity or Schwab -- can provide. It won't make me stop using my local bank for electronic bill payments, but it has made me curious about just what I can do with Money and Moneycentral. These products could help Microsoft wrestle its way more deeply into the financial-services industry more quickly than many expect.

Smith covers a wide variety of topics, including personal-finance issues, from BusinessWeek's Boston bureau. You can let him know what you think of Microsoft's financial-services tools by e-mailing him at geoff_smith@businessweek.com

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