Finding new ways to spend money you do and don’t have makes up the two largest segments in consumer finance: payments and credit, respectively. Finding new ways to save money – for a large purchase, a rainy day – is a barren landscape. Of course, saving is like flossing your teeth: you know you should, but ignoring it won’t kill you.
Ironically, it can and will, as we see non-savers on the cusp of financial ruin with frequency; more likely to file for bankruptcy; more likely to default on a mortgage. And the macro-economic consequences are big, too: Chinese savers own trillions of US debt; excess credit reliance causes things like recessions. American’s savings rate are amongst the lowest of all developed countries.
So, oddly the most innovative and active import of ideas on how to save are both ancient and originate from the developing world. And a pool of companies are introducing their spin on the idea of pooled savings as a way to effectively change behavior and provide immediate benefits of stuffing a little dough away.
The idea is that if you band with a group of people you know and trust and each agrees to contribute a fixed amount every week for a number of weeks equal to the size of the group, every person can have their turn to take the collective pool. Let’s say 5 people agree to contribute $100 per week for 5 weeks. The first week I could get access to $500 – to buy that iPad I wanted. The next week, the next person gets $500, etc.
At least six companies are all building out this basic idea: Yattos, puddle.io, ClearStreet, eMoneyPool, OurSusu, and PeoplePoweredSavings. Some fairly straight forward – and stalling. Some with cool bells and whistles, like offering a premium to group members to take their bout towards the end (and charging those who want early access – but still less than interest on a prime credit card). Some integrate into social networks, like Facebook, partially or completely.
Using the internet and bank connectivity to leverage and old, and sound, idea makes perfect sense – on paper. Using modern social media to extend the ancient power of guilt and pride is very cool – in theory. Our nanny, from Trinidad, religiously participates in a “susu” – as they are called in the Caribbean. Would she do it online? Nope. Should “westerners” learn and benefit from this idea – absolutely. But will we? I doubt it.
If any of these sites will make it to any scale, they will need to be great marketers. They’ll need to start with net-savvy, but older immigrants, for whom this model was native, but who aren’t rebelling against the “old world ways.” They’ll need to appeal to introduce a complex idea to well intended, but disinterested group of Westerners to make it big enough to matter. I sure hope someone does: I need it personally, as does this country. If I were to bet on one of these, it would be Yattos.com, despite the fact that I set up a group, invited people and failed to get any interest, including people close to the company. So I’m left to save on my own, the old-fashioned way, and pine for Susu’s not just being a silly lyric in a Phil Collins song.