Financial aggregaters like Mint seek to help you manage your finances by providing you with enough information to do it yourself. The problem is, a lot of us have absolutely no idea how to get our budgets under control. Banzai is a financial management tool that seeks to tackle this end of the equation.

I recently had a chance to speak to Morgan Vandagriff, Co-Founder of Banzai. This is what he had to say.

Since Mint and Wesabe came out earlier this year, there have been quite a few financial aggregaters released to market. Tell me what makes The Banzai Way Different?

Taking Control Of Your Finances

The Banzai Way is based upon the understanding that organization is not the same thing as control. As you know, Mint, Wesabe, and just about everyone else in this space focus on the former by specializing in data aggregation and analysis. While organization is fundamentally important (it keeps you from bouncing checks, ensures the electric bill gets paid, etc.), it does little to change spending habits over the long haul.

Rather than aggregating data from past transactions, Banzai uses a unique “Jars” paradigm (read all about it here) to focus users’ attention on the spending flexibility they have now and the impact their decisions will have on the future. Users are free to spend more than they had planned in any given area, provided they identify a compensating trade-off they are willing to make elsewhere. We’re leveraging the psychology of spending for the user’s benefit, rather than trying to change the way he/she thinks.

As you may know, one of Mint’s slogans is “Put your finances on autopilot.” This is an attractive proposition for someone who is already in good shape financially, but spells disaster for anyone whose current course is leading them into the side of a mountain. The last thing someone with a real spending problem needs is to have the impact of individual transactions obscured through aggregated reporting.

To this end, Banzai users assign every individual expense to a jar themselves–we don’t make the decision for them. While it only takes a few seconds per transaction, this step is crucial in that it allows users to see the individual impact of each spending decision and designate trade-offs where necessary to ensure that they remain on course.

For most new users, The Banzai Way represents a radical departure from the financial management paradigms they’ve used in the past. To assist with the transition and provide needed encouragement along the way, we assign each user to a “Banzai Coach.” Upon sign up, he/she is given the name and email address of their coach and encouraged to contact him/her whenever they encounter difficulties, be it with the website itself or with changing their habits to conform to The Banzai Way. The name of their coach and a contact link appear at the bottom of most pages on the site.

The Banzai Way

The Banzai Way doesn’t seem to be purely a web service. What is “The Banzai Way?”

The Banzai Way is the philosophy underlying the web application, which we refer to as Banzai. We make the distinction because we want people to understand that we are trying to advance a particular way of thinking about money management. While we’ve tried hard to create an optimal implementation in the form of our web app, you can “follow The Way” without ever visiting our site.

I’ve actually written a book, The Banzai Way, the first several chapters of which are dedicated exclusively to a discussion of the philosophy. It describes how to implement the system using spreadsheets you create yourself, if you choose not to use the web application. You could also create an implementation using a database or even paper and pencil. (Incidentally, new subscribers to the web application receive a printed copy of the book for free.)

Information Privacy

People are very hesitant to release their financial information to any system that they do not have a strong trust relationship with. How are you overcoming this fear? Does The Banzai Way require that you give the service access to your financial information?

The only personally-identifying information we retain is your email address. We discard your credit card information (including your name) once payment has been processed and we do not ask for any other account numbers, usernames, or passwords. We facilitate automatic transaction entry by allowing you to upload Quicken or Money data files obtained from your bank. This feature, which is optional, does not require us to collect login credentials or any other personal information.

For what it’s worth, this isn’t just a marketing ploy. By keeping this information off of our servers, we dramatically reduce our liability and regulatory compliance costs and completely eliminate the possibility of a data breach doing harm to us or our users.

Building A Community

How are you expanding your user base? What has been most successful? Has anything not worked as well as you believed it might?

We’ve only been available to the public for a few days now and the official press launch isn’t taking place until next week, so I’ll couch what follows with the admission that we’re not counting unhatched chickens!

In addition to the standard methods used by all startups–encouraging viral growth, seeking press/blog mentions, etc.–we are also preparing extensive outreach efforts to non-profit and public education sectors to offer versions of the web app customized to their needs.

We make no bones about the fact that The Banzai Way is strong medicine and requires some level of commitment on the part of users. Because of this, we anticipate that our biggest market lies in the ever-growing group of people living under significant financial pressure and we’ve tailored our message accordingly.

We’ve been surprised, however, to discover that some of our most active beta users didn’t have money problems, but responded well to the highly-systematized approach offered by Banzai. There appears to be a group of highly-conscientious individuals for whom the jars paradigm and “rules” of The Banzai Way (spending five minutes each evening reviewing the day’s spending decisions, for example) resonate. We’re currently seeking ways to identify those who belong to this group for outreach efforts.

Regarding methods that have not worked well, pay-per-click advertising has been a bit of a wash-out for us. We ran test campaigns on Google and Facebook but discovered that the attention span of users arriving via ad click-throughs was insufficient for them to grasp the concepts that are central to the philosophy.

The Burning Question

What has been your most difficult challenge working on this project?

While it is not terribly complex, The Banzai Way differs greatly from the traditional systems to which people are accustomed. Because of this, early beta users had problems grasping certain key concepts. We spent months trying different ways of explaining them before we found success with the jars analogy.

Believe it or not, this single issue was far more challenging than any technical obstacle we faced.

Web 2.0 Roundup

Thanks again to Morgan for taking the time to talk to me. Be sure to take a look at Bazai, it might just help you save up enough money to buy something other than cards this Holiday season.

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