Two very different sorts of competitor are jockeying for dominance in the rapidly evolving market for on-line personal financial services. Banks and other incumbents bring to this arena their customers, brands, and starting position as trusted providers of financial products and services. Meanwhile, software companies offering personal financial management (PFM) programs, bring their own customer base, a bias toward designing products that delight users, and experience of competing in another volatile arena. The leading examples of these PFM programs are Intuit’s Quicken and Microsoft’s Money.

Broadly, both these types of players share the same objectives: acquiring customers, providing them with new financial information, services, and products, and doing so in a way that is difficult for competitors to replicate (see Exhibit 1). The participants in this game are caught up in the classic web structure that characterizes many high-tech industries during their early uncertain phase of development.¹ Players are jostling to shape an inchoate industry structure to their own advantage, while at the same time cooperating and even allying with many of their ostensible competitors. With on-line consumer revenues currently small, and direct profits probably negligible for at least the next few years, players should be looking...