Retailers offer 8% gift card bonus on ANZ’s smartypig.com.au redemptions

With 5% interest paid quarterly, Facebook and MySpace friends having access so they can pay in to your account, and “extra value” bonuses of up to 8% when funds are redeemed at a major retailer as a gift card, the ANZ Banks’ smartypig.com.au is certainly different.

No doubt the bank has high hopes it will prove very popular with the millions of younger Australians who spend a lot of their time ‘hanging out’ at social networking sites like Facebook or Myspace.

Responding to our enquiries about smartypig, which was launched this week, an ANZ spokeswoman said that the US developed service will be Australia’s first online savings account that uses Web 2.0 banking technology and social networking sites.

“SmartyPig accounts currently offer an interest rate of 5%pa and family and friends can securely contribute to people’s savings goal through the Australian SmartyPig website or via social networks like Facebook and MySpace. The account is set up to help customers save for a specific goal and tracks their progress, providing electronic updates as they reach major milestones. As SmartyPig customers reach their savings goals they can also receive “value boosts” of between 4% and 8% from a range of major retailers, announced today, including:       

For example, when a customer has saved $250, they can receive between $10 and $20 in extra value as gift cards from their chosen retailer. Customers can choose one retailer per savings goal.”

It is just as well the spokeswoman provided this statement because none of the financial details about the “value boosts” are provided at the official web-site.

So it isn’t at all clear that extra value boosts will be, in fact, 4-8% increases in the value of funds redeemed as gift cards. They may, instead, translate into discounts on normal prices or some other method of defining a “value boost”.

A similar confusion surrounds the new “electronic gift cards” available as part of the ANZ’s smartypig service.
It seems these are entirely virtual cards. And you don’t even have to be a smartypig customer to buy one or even receive one. You just get it in your email.

But it’ll cost you at least $10 to accept a smartypig.com.au gift card. Mbr /> That’s because you have to open a smartypig account to access the funds and you need to commit to at least $10 in a savings goal to open an account.

Indeed savings goals are the structural framework of every smartypig account.
That’s because all smartypig users have to set a savings goal, with the minimum goal being $250.
They also have to set up a recurring direct debit facility that will regularly transfer funds into the smartypig account.

But what makes Smartypig unique, and innovative, is firstly, that savings goals aren’t just monetary targets; they include what the money is for.
Or in other words, what the savers plan to do with their money, whether that’s buy a new car, take a holiday, or pay for a wedding.

Secondly, every Smartypig.com user agrees to make their goals either public, or if not, then at least accessible to a group of family and friends.

That agreement, and providing distributed access to the users account via Facebook and Myspace brings it into the web2.0 and online world of the newer and younger generations. And it means lots of online chat and buzz.

It doesn’t take much to get people to talk about about spending money, whether on or off line. That’s why smartypig has been successful as a web 2.0 and social networking innovation - people love to talk about what they would do or buy if they had the money.

Even so, there are plenty of questions about smartypig.

It poses some intriguing regulatory challenges, particularly over the “value boosts” at retailers, the electronic or virtual gift cards that expire in just 90 days, and the fact that it costs recipients to accept those virtual gift cards.

Another noteworthy aspect of Smartypig is that the US bank standing behind it in the US, is West Bank - a very, very small bank, even by Australian standards.
To get an idea of just how small it is, the West Bank, which is headquartered in Des Moines Iowa reported a profit of just $US2million in the latest quarter.

So the ANZ has taken some level of risk in becoming associated with this product. Of course, as they’ve demonstrated with their recently released Account Aggregation product – Money Manager, the ANZ has a much bigger appetite for these technological risks than other local banks.

Moreover, there is a converse risk of not getting on board with these types of new products. That is to risk becoming seen in the marketplace as out of touch with the new generation of banking customers who are very happy to talk, date, bank, shop and live online.

Credit therefore to the three ANZ bank staff listed on the smartypig.com.au web-site executives of the new business.

Mandy Simpson
Mandy Simpson is currently GM, Deposits for ANZ where she is responsible for the development, pricing and distribution of ANZ's savings, investment and transaction products. While having over 14 years of banking experience in a wide range of countries, Mandy has most recently worked as Head of Finance and Strategy for Banking Products ANZ and was also the Managing Director of ANZ Samoa. Mandy has also held a number of directorships ranging from the Private Sector, Government and NGOs. Mandy holds a Bachelor of Commerce (Accounting and Business Management) from the University of Canterbury, and is a qualified Chartered Accountant.

Sam Plowman
Sam Plowman is Head of Online Banking at ANZ. Before joining ANZ in 2008, Sam held a senior role with Fairfax Digital, during which time domain.com.au was awarded 'Best Australian Classified Site' by the Australian Internet Industry body. He also established the first centralised online sales team for Sensis in his role as Group Manager of Online Products. Sam holds a Bachelor of Business (Marketing) from RMIT.

Anand Thomas
Anand Thomas serves as Head of Strategy and Business Development of ANZ Online Banking. Anand has over 7 years of Asia Pacific banking experience specialising in online and retail product innovation and strategic marketing. Anand’s experience includes working for both newly set-up and established banking entities in India, Singapore, Philippines, Vietnam and Indonesia. Anand holds an MBA from the University of Melbourne

For more information go to
www.smartypig.com
www.smartypig.com.au
www.westbankiowa.com

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