Monday, February 23, 2009

SmartyPig Co-Founder Responds to Social Networking Article


Last week I wrote an article about Australia’s largest bank, ANZ, and their strategy to encourage Gen-Y to save money rather than spend it. They teamed up with US-based SmartyPig to develop a web app for social networking sites that can track your savings from your MySpace or Facebook page.

My two arguments were:
-Most people’s “friends” on their social networking sites aren’t really friends but sometimes acquaintances, and would not want their financials broadcast to these people they barely know.
-ANZ said the “new venture is targeting Generation-Y in an attempt to teach financial responsibility and promote savings.” However they offer incentives for their customers to convert their savings and/or interest earned into gift cards; which appears entirely contradictory to ANZ’s mission.

Shortly after posting, SmartyPig’s co-founder, Michael Ferrari responded with the following:

Josh,

Thanks for the post. My name is Michael Ferrari and I'm one of the co-founders of SmartyPig. Saw your post come across my alerts. I spend a great deal of my time each and every day listening to customer feedback, thoughts and suggestions. And jump in whenever I can.

I started SmartyPig as a way to help people save money for specific goals in their life. Be it a down payment on a house or apartment, an emergency fund, a Wii, a MacBook Pro or a family vacation. And in doing so I thought it would be great to let people make these goals "public" allowing friends and family to contribute. And in making them "public" give users the opportunity to share their gals on their social networking site of choice (if they choose) like Facebook, MySpace, their personal blog or their desktop. Our widget platform is built on the Clearspring technology http://www.clearspring.com/. In doing so, it provides an opportunity to let others know what you are saving and allows friends and family the chance to contribute to your interest-bearing goals. Don't want that "sweater" for your birthday, perfect, please contribute to my "Trip to Honduras" goal instead.

Again, the social side of SmartyPig is optional. Our goal is to help change the mindset of "buy now, pay later". And in doing so, should you choose, SmartyPig has some great features to help you get the word out to friends and family be it moral support or financial support.

Some quick stats:

-66% of our customers in the U.S. are under the age of 35
-1 out of every 3 goals created on SmartyPig are public

...Thanks for the opportunity to share my thoughts. Really appreciate it.Mike Ferrari, SmartyPig co-founder @mferrari

First off I want to thank Michael Ferrari for taking the time to comment. I think that he helped to help paint a clearer picture of SmartyPig's intentions. I think it’s also important to note that the article originally quoted, neglected to mention that the widget has a privacy setting and doesn’t have to be broadcast to everyone (for those of us who don’t want to share our financials). While I personally cannot see myself sharing my financials on Facebook, I can see the value of SmartyPig’s widget if I could change my privacy setting.


However, I must still push back – but not at SmartyPig, but at ANZ. As stated in the beginning of this post, I have two gripes: privacy, and hypocrisy. Michael addressed the issue of privacy, but what still rubs me the wrong way is that ANZ is promoting and what almost seems like encouraging customers to convert their savings and interest earned to gift cards. If their goal was to “attempt to teach financial responsibility and promote savings” to Echo Boomers, then why are they trying to get us spend our savings on gift cards?

I don’t think this is just an issue with ANZ, but with banks at large. All the “perk” that go along with savings programs, credit cards, etc. encourage more spending, not saving. It’s the same irresponsible spending habits that got us into this financial crisis in the first place. If we’re to progress out of the recession and truly learn from our mistakes, we need to change our spending/saving habits moving forward. Having our “savings institutions” encourage more irresponsible spending habits is only furthering the process.

What is your take on the saving habits of Gen-Y? Will the current recession help change our notoriously bad savings habits, or do you think we'll see more of the same?

A sincere thank you again to SmartyPig’s co-founder Michael Ferrari.

-Josh Groth

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