Blog

Move over ceramic piggy bank. SmartyPig wants to change the way 20- to 30-year-olds save money using an online savings account with built in social networking functions. It’s kind of like an “ING Direct meets Twitter and Facebook” savings account with a virtual twist. 

In partnership with Iowa-based (and FDIC insured) West Bank, SmartyPig lets users establish a free online high-yield savings account (currently 3.9% APY). But that’s just the start. SmartyPig also lets users share their savings goals using email, Facebook, MySpace, Twitter, and posts on the SmartyPig web site.

That allows SmartyPig customers to be very open and public about their savings goals, such as weddings, trips, college funding. Customers then may even ask friends and family to contribute (using a credit card or ACH transfer from one bank to another) to their SmartyPig accounts, in lieu of gifts or cash, to help meet savings goals like a down payment for a new house.  Online tools and visualizers let users track progress.

An added benefit to users is cash incentives, up to 6%, to savers who meet their goals. SmartyPig has partnered with some of the country’s top retailers (Best Buy, Amazon.com, Overstock.com to name a few) that often sell the very items people have been saving for (like that washer/dryer for the new house).

Amidst the credit crunch and dire economic conditions, SmartyPig is taking a stand that “it is time to reverse the credit-card mindset of ‘buy now, pay later.’”

Instead, SmartyPig invites people to “Join the saving trend! Create a goal! Today is the first day to start ‘saving’ your life.”

It appears people are doing just that. According to press reports, a full 67% of SmartyPig users are under the age of 35, 20% are between 36-45, and the remaining 13% are older.

And for “traditional” bankers, as if they didn’t already have enough to worry about, this should yet be another wake up call about the huge battle for deposits that’s taking place online, and the increasing impact of social media on banking.