Big Banks Take a Hint from

What's the hottest innovation amid the recession? Web sites that let users manage their spending and other financial decisions. In September, Intuit (INTU) made a $170 million bid for, the pioneering force behind the latest generation of personal finance tools.

Now some big global banks are piggybacking on the idea in an effort to boost loyalty and attract a younger clientele. In the latest example, Citigroup (C) and Microsoft (MSFT) are teaming up to create Bundle, potentially a standalone site to compete with Mint, according to a Bloomberg article. Says Mark Schwanhausser, an analyst at consultancy Javelin Strategy & Research: "Mint has applied pressure on everybody to be more innovative."

The new personal finance tools at banks' in-house sites are similar to those at Mint. Customers can aggregate their data from several outside bank, brokerage, and credit-card accounts—and get their complete financial picture in one place. JPMorgan Chase's (JPM) Blueprint lets the bank's 20 million credit-card holders design a plan to pay down balances. The Dutch bank ING (ING) is testing a service where customers can compare their spending habits to others.

The payoff could be huge, especially in terms of loyalty. Online banking customers check their accounts twice a week on average and are less likely to leave a bank, according to Brad Strothkamp, an analyst at consultant Forrester Research (FORR). Banks figure that the extra tools and resources will encourage even more customers to stick around. "If we have products, services, and the best experience, that will give us more of their business or attract new customers over time," says Eileen Serra, president of Chase Card Services (JPM), which launched Blueprint.

Banks also are hoping to attract a younger clientele. Mint's 1.5 million users tend to be young and upwardly mobile. The median Mint customer is 30 years old. It's a critical demographic for banks. Unlike baby boomers, members of the younger generation are just establishing their financial lives, making them a lucrative market for new mortgages and credit cards.

TARGETED PITCHESUltimately, banks are hoping to cash in on those sorts of cross-selling opportunities. By mining data across several accounts, they can get a better sense of which of their financial products customers might want. "If you know what customers hold, you have a much better idea" of what services they need, says Javelin's Schwanhausser. Banco Bilbao Vizcaya Argentaria (BBV) is among the first to pitch consumers; in late October, it will start selling real estate and rental services to customers in Europe through Tú Cuentas, its personal finance portal.

A similar strategy has been critical to Mint's success. In its "Ways to Save" section, the site makes targeted pitches to customers based on credit scores, purchase history, and other financial metrics. Right now, Mint is teaming up with banks, brokerages, and credit-card companies to develop tailored promotions, and it plans to expand into travel and auto insurance.

Mint makes most of its money off the promotions. CEO Aaron Patzer says 20% of customers that use the "Ways to Save" section check out the deals. (Traditional banner ads garner a click-through rate of roughly 1%.) Users also tend to buy: Depending on the category, customers will take advantage of the deals 20% to 40% of the time, estimates Patzer. "That's why Intuit is buying Mint," says Jim Bruene of Online Banking Report, a trade publication. And it's why banks are following the site's lead.

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