The Risks of PFM Revealed

It was an interesting and dangerous week in the PFM space. I have been talking about the security risks and data privacy issues of PFM for some time and unfortunately my predictions have come true. This is what happened:

• Rudder experienced what I would consider to be a serious data breach. Certain Rudder users were able to see the account information of other users. Twitter and the blogosphere were ablaze yesterday with details of the breach. A good summary can be found on the TechCrunch blog. This is a serious blow to Rudder and the entire consumer direct PFM space. This is an inexcusable gaffe and one that will have folks questioning whether they should be providing their account info to these sites.

• Mint.com may begin to sell "anonymous" consumer data (This Bloomberg article sums it up). This will raise the eyebrows of many users and I believe it is a privacy violation. Banks have all kinds of "anonymous" data on their consumers but they can't just turn around and start selling it (they would likely get shot down by regulators).

These 2 events further reinforce my belief that PFM needs to be taken care of by a bank. Startups may have cool, next generation products, but they can't necessarily be relied upon to protect your information and privacy. Don't get me wrong, many banks have experienced data breaches, but they answer to a higher authority and are in a better position to help customers deal with the consequences.