Okay, please excuse my ignorance if there's something I'm missing here.
I understand the problem when it comes to saving, and the issue of dipping into savings when you shouldn't. But I really don't see the point in a service like this, at least not personally.
There's three main issues I have with it:
1. Why should I let some random company I don't know or trust keep my savings for me? I would assume you're not a actual bank, so should you go bankrupt there's no government insurance that'd ensure I don't loose my money. And not saying you would, but from my point of view, what's there to stop you from taking the money and run?
2. A charge of 3%. So to save £100 I'd loose £3. If I was saving for a Retina MBP of around £2,500 I'd lose £75.
3. Interest. Ok, sure, banks pay pretty horrible interest, but still, I'm loosing out of money I would otherwise have gotten. I saw your response about working on providing interest somehow in the future, but I'm focusing on the now here :)
When you add it all up, the increased risk of losing all the savings, combined with the loss of money in the 3% charge and lack of interest, personally I really see no point in using your service compared to my bank's savings account.
And ok, it's easy to move money out of my savings account, but it's supposedly easy moving it out your service too. If you were to change that, there might just possibly be some point to it compared to a savings account. Except then you're treading on dangerous legal and/or moral ground if you deny people access to their money, even if they've previously agreed to the terms.
On a final note, I believe the only valuable feature you have to offer is the fact that friends can chip in. If I were you, I'd focus on that feature instead of holding people's cash. Let people set up some kinda campaign page for their new phone/laptop purchase and let family and friends chip in, wiring the money back to the user, rather than you holding on to it. Think of it like a personalized kickstarter mashed with amazon wishlists or something.
<rant>Let little Jimmy Neutron setup a campaign for his wish to get an Xbox One. He's got £200 cash already, which the campaign reflects, then he sends the campaign page to his grand parents, uncles, aunts, etc, and maybe they'll chip in enough so he can get his new console.</rant>
How do you handle the legal side of things? Aren't you, in most countries, considered operating as a bank in this scenario? And therefore tied to a whole load of regulations?
We're aggressively pursuing FCA regulation in the UK since we're pretty compliant with their policies already. Suffice it to say, we're doing everything we can, we really don't want to screw this up.
First, sounds like you're solving a major problem that most people have - sweet!
However, this is my constructive negative feedback - I don't think it will work because of this one piece here:
Pause if you know you'll have less money this week, deposit a bulk amount if you'll have more, even let friends and family deposit.
I tried doing this in a rather "manual" fashion by setting up a recurring monthly deposit into ISAs. The reality is - the freedom to turn it off is a huge anti-pattern to saving money. You need to make it very difficult to have the user turn off their dripfeed. Perhaps they have to make a call, or maybe they get penalized? Either way - I see this as your most important "anti-feature".
I would also question the commercial model of this - you're going to take a cut as well as GoCardless. It'll be interesting to see if people are willing to pay for that. However, what would be interesting (potentially) is to have a model (similar to financing) where the actual item is purchased through your platform. This will get complicated, but maybe there is a way to undercut the traditional micro-financing models that exist today?
We're looking into a whole bunch of ways to stop charging fees as soon as we can - it was kind of the lazy way out for the short term. We're looking into referral fees, as you suggested, as well as earning interest. We also had an idea that, since we know what a user is saving for, and roughly how long it'll take for them to save for it, we could put the item up to tender and hunt down cheaper deals so the user can save money. Just an idea, but there are so many interesting things we can try when we have that kind of data.
Re: pause - I totally didn't consider that, and smurfy brought it up too, so I'm probably going to build out a 'protect me from myself' feature to do just that
The "protect me from myself" feature would be great on a per item basis. Say, for example, I'm setting up a dripfeed for a new phone (nice-to-have) and another for winter jacket (really need). When setting up the dripfeed for the winter jacket I would turn on "protect me from myself", since I really need the jacket, but I wouldn't turn it on for the phone because it is just a nice to have.
Hi there! Just to let you know, I introduced the 'protect me from myself' feature you suggested today, there's a blog post about it here: https://news.ycombinator.com/item?id=6503740
I can see how this might be useful for some people. Personally, I have my savings account on line and they allow me to just make any number of "sub accounts" that I want. So I have used that before to create sub-accounts to save for specific things. I then set up automatic transfers from my checking to that savings account. The most successful one was a "new car" fund. Once my old car was paid off, I continued to make the same payment amount to the "new car" fund. It helped me maintain my habit of making a car payment while helping me save for the down payment. Worked like a charm.
As a person who is not a great money saver, this seems like a great tool that I will most likely use. Just a note, the text on my PC using chrome is nearly unreadable, the font renders strangely, not sure how to describe it.
The site looks nice, however I'm slightly puzzled. What do I gain from Dripfeed over the current standing order that transfers a fixed amount per month from my current account to my savings account?
Very good question: Banks generally don't award much interest for small, short savings, they're really geared towards saving for cars and houses, not small goals.
We, on the other hand, are designed to help you save for the small things in a much nicer way, and we're working on ways to make your money work in ways that banks really just don't care about.
Case in point - in the next few weeks, we're rolling out a feature that finds cheaper offers for the item you're already saving for (since we know what you're saving for and roughly how long it'll take to save for it), we can leverage the fact that you're saving for something to encourage a supplier to offer the product cheaper in return for the money right now. That's just one of the ideas we're working on right now.
Why would a manufacturer do that? I understand it's profitable from your end, but if the customer is already saving up for an item and has obviously decided it wants to pay the price it's reserved, why would the manufacturer want to lower the price? It would be like shooting yourself in the foot...
Things change, as do circumstances. I may be saving for a $600 phone, but after a couple of months, I opt to buy something else with that money instead. Now the original vendor has nothing. If a vendor makes a profit on the device after $300, it behooves them to offer it to me at $520 to ensure they have that $220 profit.
I think its a really good idea. It would be cool if you could have an on/off switch to make pausing more difficult. For instance, I know that for myself, as soon as I wanted to spend that money I was saving, I would just pause the service. But if I could make it harder to do that (I.E. make it so I have to do several prompts to pause it, answer some math problem or something that would take me more than 5 seconds to open an app and hit pause), I would certainly turn that on for myself.
You could set up security questions for yourself. Like you have to input an answer to "Why do I want this MacBook", and, "Why is this MacBook more important than a latte this morning".
Take the old Windows approach. "Do you want to pause?" "Are you sure?" "Are you really sure?" "Are you really, really sure?" (repeat this a few dozen times)
This is a neat idea but the fee (3%) is disappointing (but expected). It reminds me a little bit of how Simple is doing "savings". If you haven't heard of Simple[0] it's a new-ish bank (build on Bancorp) that has awesome customer service and some really useful tools to help you save. If anyone wants an invite send me an email (In my bio) with your email address so I can send you one.
This sounds pretty cool. I do not see if it costs anything to do. Am I charged processing fees? Pay per month to dripfeed?
EDIT: I found the FAQ link. https://www.dripfeed.co/faq. Looks like it is 3%
The site looks great, and I think a lot of people would want something like this. You've mentioned in other comments that you're hoping to get some kind of interest going. That, with what you've already got, is enough for me to signup.
Right now, no. I know that sucks, but we're looking into ways to leverage savings to earn more interest than a bank would typically give you for a small, short-term goal. Part of the reason I started working on Dripfeed was because my interest rate went down to about 0.08%, which is effectively nothing on say a £500 phone.
I understand the problem when it comes to saving, and the issue of dipping into savings when you shouldn't. But I really don't see the point in a service like this, at least not personally.
There's three main issues I have with it:
1. Why should I let some random company I don't know or trust keep my savings for me? I would assume you're not a actual bank, so should you go bankrupt there's no government insurance that'd ensure I don't loose my money. And not saying you would, but from my point of view, what's there to stop you from taking the money and run?
2. A charge of 3%. So to save £100 I'd loose £3. If I was saving for a Retina MBP of around £2,500 I'd lose £75.
3. Interest. Ok, sure, banks pay pretty horrible interest, but still, I'm loosing out of money I would otherwise have gotten. I saw your response about working on providing interest somehow in the future, but I'm focusing on the now here :)
When you add it all up, the increased risk of losing all the savings, combined with the loss of money in the 3% charge and lack of interest, personally I really see no point in using your service compared to my bank's savings account.
And ok, it's easy to move money out of my savings account, but it's supposedly easy moving it out your service too. If you were to change that, there might just possibly be some point to it compared to a savings account. Except then you're treading on dangerous legal and/or moral ground if you deny people access to their money, even if they've previously agreed to the terms.
On a final note, I believe the only valuable feature you have to offer is the fact that friends can chip in. If I were you, I'd focus on that feature instead of holding people's cash. Let people set up some kinda campaign page for their new phone/laptop purchase and let family and friends chip in, wiring the money back to the user, rather than you holding on to it. Think of it like a personalized kickstarter mashed with amazon wishlists or something.
<rant>Let little Jimmy Neutron setup a campaign for his wish to get an Xbox One. He's got £200 cash already, which the campaign reflects, then he sends the campaign page to his grand parents, uncles, aunts, etc, and maybe they'll chip in enough so he can get his new console.</rant>