Smarty Pig is an online resource that gives consumers the chance to reach their savings goals more quickly by informing their friends and family of their intentions, so they may also make contributions as they wish. This is a great way for others to give gifts for special occasions and also know what exactly the money is earmarked for. Savers can choose whether or not to make their accounts public and also to whom. With the click of a few buttons, the person wishing to make a gift can do so.
So how did this bright new idea come about?
After Mike Ferrari opened a college savings account for his son, he also tried to find a plan in which he could put money aside for other purposes such as a family vacation. He found that what was available was not only too complex, but also did not offer many benefits.
Once he saw this void, Mike then teamed up with Jon Gaskell to establish Smarty Pig. They formed a partnership with West Bank, a 115-year old Iowa state bank that holds assets of over $1.3 billion. They also partnered with DataVision for data capture services and Maritz to provide their incentive program and gift cards.
The number of U.S. households that are banking online has steadily increased over the years since 2003. Only in operation for the past few months, Smarty Pig has experienced almost immediate success with the program.
Co-founder Jon Gaskell stated “The program has exceeded our expectations. For a company that has done zero dollars in advertising, and basically just reached out on a grass roots level, we have experienced tremendous success. We have customers in all 50 states with the average goal amount of roughly $8,000; a lot higher than we thought it would be. We see people saving for goals that are about 3 ½ years out.”
Wondering what types of goals is Smarty Pig seeing under this new program?
Well according to Jon, Smarty Pig was created for people to save sensibly and easily for short-term goals, not for such longer term purposes as planning for retirement. However, the company is finding that there are some longer-term goals mixed in with the short-term ones. They are experiencing that many people seem to be saving for a down payment for a house or a car for their children.
With no advertising dollars spent, how did people find out about the program?
To spread the word that this new type of banking was available, Jon and Mike took the message out to the Blogosphere. Individuals in the financial and technological arenas performed reviews of Smarty Pig. Almost all of them came away with positive experiences using the product and finding out what was different about it. Then old fashioned word-of-mouth took over and the business has grown steadily and quickly.
Customer service is one of the main ingredients that has helped lead this company into such rapid success. They thrive on customer feedback and are happy to make adjustments accordingly.
“Just about everyone has a positive experience when they contact Smarty Pig.” Jon noted. “We like to capitalize on some of the ideas that are brought to us by our customers.”
Smarty Pig’s main goal is to be the “place to be when people want to sensibly save for a goal,” according to Jon.
Especially commendable is the company’s ability to converse with teenagers and young adults about managing finances appropriately. They are thrilled that many parents are using Smarty Pig to teach their children about money. Although you need to be 18 to open an account, parents can open them for their children and provide a valuable learning experience while achieving their goals.
“We’re the only banking application that is social,” stated Jon. “You can put your Smarty Pig budget on you’re ‘my space’ or ‘face book’ page; you can create your own smarty pig friends network. The technology allows you to do blast emails from Smarty Pig to friends and family so that you can proactively save for a goal. You can’t do that anywhere else. So we are getting a lot of the younger generation, and to be honest they need to start figuring out how they are going to handle their finances.”
Jon also noted that in today’s economy, people can’t afford to continue living on credit. He expressed that option will run out eventually. He believes people are in need of a simple way to save up for their goals.
“We are trying to show the marketplace that there is something that is exciting out there regarding the age old idea of saving up for something before you buy it,” explained Jon. Smarty Pig is really an old concept. We’ve created the 21st century version of that concept. We are an optimistic way of approaching your finances and creating good habits to really get you moving toward your goals.”
Besides the opportunity to publicize your goals to selected individuals, there are several other benefits to be found by participating in the Smarty Pig savings program. One is that the account typically pays a higher interest rate than regular savings accounts. Although the rate varies, it is currently at 4.23 percent. In addition retail incentive boosts are also available. For example, when you reach your saving goal, you have the option of requesting a retailer card that may provide up to an additional 5 percent in cash value.
Most importantly, Jon and Mike have taken the utmost precautions to ensure the web site is completely secure. If you decide to publicize your goals to specific people, only your goal information is revealed; no private information is divulged. You can only see how much a person is saving and at what percentage they are toward their goal.
“Accounts created, whether they are made public or private, are as secure as they are in any bank,” stated Jon. “They have been reviewed and approved by the FDIC. We have partnered with a 115 old bank that is a publicly traded company, West Bank. The site has been developed and maintained by a company that has experience working with some of the largest financial institutions in the world. On top of that we are certified by Hacker Safe, VeriSign, and Truste. We have taken six or seven steps, not to mention all the internal auditing that is done so that people’s money will always be secure.”
Currently about 52 percent of Smarty Pig’s accounts have been made public. Contributions can be made by clicking on the button that says ‘contribute’. People are in essence making an electronic gift that must be accepted by the recipient. This has become very popular especially with graduations. The concept has also been considered the ultimate wedding registry. With dollars earning a decent return; people are able to do what they want with the money.
Smarty Pig is an easy and fun way to save, attracting much of the younger generation. The concept is leading them in the direction toward what kind of commitment they are going to make to themselves in managing their finances. The company has been already touted as the “IPod®” of online banking, and is expected to become quite well-known in the near future.
