| By Jim Bruene on June 25, 2009 5:21 AM | Comments (1) |
Maintaining one of the highest rates in the country, currently 2.75% (see note 1), SmartyPig's deposits have grown ten-fold since January (see chart 1, below). And the company plans to continue its aggressive pricing and marketing, hoping to grow another five-fold to a half-billion by year-end (see chart 2, below) or 50x what they started the year with.
Deposits in the United States are held by part owner, Des Moines, Iowa-based West Bank. Australian deposits are held by SmartyPig partner ANZ Bank.
To help fund their growth objectives, SmartyPig announced today that Red McCombs, co-founder of Clear Channel Communications, has invested an undisclosed amount. McComb Enterprises lists one other financial services company in its portfolio, asset-based lender, Propel Financial Services.
Founder Jon Gaskell is pleased with the aspect of goal-based saving at SmartyPig. In an email yesterday he told me:
Of our customers who have reached a goal, more than 80% of them have started a new goal. The average SmartyPig goal length is nearly 4.5 years, and our average user is depositing a little more than $200 per month toward his or her goal. Fifteen months after launch, our data suggests that a vast majority of our customers are staying focused on their predetermined goals, and the deposits are "CD-like" in nature.
The half-billion-dollar question, assuming they meet their 2009 projection, is how sticky are the deposits when rates come down off the top of the chart?
Chart 1: Actual deposit growth at SmartyPig
Chart 2: Expected deposit growth through Dec. 2009
Source: SmartyPig, 25 June 2009
SmartyPig homepage (24 June 2009)
Notes:
1. In Bank Deals weekly list of highest savings rates, SmartyPig was number one on June 20 at 3.05%. The rate was lowered on June 22 to its current 2.75%.
Interesting timing on this post, Jim. I'm struck by the juxtaposition of the SmartyPig story with an article in today's American Banker titled "Banks Making a Science Out of Deposit-Gathering".
The AB article says "As they fight for core deposits, many banks are honing their methods for targeting deposit-rich customers...and say identifying the most profitable prospects has become even more necessary in an era of increasingly limited resources. Finding the most attractive customers is becoming more science than art, as banks go beyond traditional demographics such as age and socioeconomic status to identify the best marketing prospects."
Hmmm. Doesn't sound like the SmartyPig story: Offer a great rate, do some aggressive awareness building, make it easy for people to transact, and add a social element.
Just sayin'.