Apparently, America’s largest minority are the working poor. Anyone working in community & economic development and social services understand the challenges faced by their clients, clearly. Savings is one large barrier that keeps a family “asset poor” and guarantees recurring financial hardships until that cycle can be broken. What families need, in many cases, to get them jump-started is a boost of cash capital. We now see our families have more options then previous generations to save. Though, these services and programs are reactionary; a response to an ailing economy and a real threat to many Americans.
With so many people needing help saving is the internet poised to take it to the next level?
What’s interesting is the merger of social networking with financial tools to create, in theory, powerful methods to accumulate and/or accelerate assets. Social networking can turn an idea into a movement. It’s infectious, aggressive, and effective at spreading the word. That’s how you found this site, right? Sites such as SmartyPig and VestMatch are one such example. SmartyPig offers customers online savings accounts with a competitive interest rate. They differentiate from other online banks because their accounts are designed for those who want to save for a specific goal or purpose, say for instance, a new car. The saver can then leverage Facebook, Twitter, email and good ol’ fashioned word of mouth to invite others to contribute towards their goal. It’s a neat idea for a family, who for example, could set up a “Get $10,000 for Jamie to go to College” savings account. While Jamie promises to save a certain amount every month, each family member agrees to match her contribution $1 for every $1 saved. Jamie then gets an opportunity to accelerate her savings and the family feels like their charity is going towards a good cause. And then everyone can see the money grow; inching towards the goal.
Vestmatch takes the ‘community collaboration’ feel steps further by offering a platform, rather than an account, in which savers and interested parties come together towards reaching a financial goal. Just like SmartyPig, users and contributors are able to monitor the progress in real time. They are both attractive options because the interface is easy to navigate and the goal or purpose is clearly defined. Transparency is a cousin of trust and both sites market that element as benefits to both the saver and the “investor”.
Though both companies seem to be in their “beta” stages could this be a hint at what the future holds for alternative savings accounts? From the time of this entry several start ups have surfaced offering similar products. Perhaps it will only be a matter of time until the ‘big banks’ see a lucrative opportunity for them to get involved. In the mean time the push for these great services are dependent on word of mouth and the advocacy of the companies themselves – mainly through social networking. And therein lies el problema; by introducing innovative products for the poor and financially-distressed are we creating yet another barrier via technology?
In order to max out the full utility of these services one needs to have access to a computer and the internet. Before that one needs to feel comfortable enough to navigate these systems. So now we’re uncovering two issues: that of computer literacy and computer/internet access. Without their resolution many will remain in the dark about opportunities that could bring light to their situation.