From Trading to Saving, Financial Platforms Eye Banking and Neobanks Branch Out

The movement by neobanks to branch into investing and credit card rewards, and investment platforms to branch out into banking, speaks volumes to the appeal of apps as digital front door to a continuum of financial activities.

PYMNTS Intelligence has detailed that 60% of millennials, 57% of Generation Z and 52% of Generation X primarily use mobile banking apps. In addition, 94% approved their overall access to financial services, and 79% said new technologies have enhanced their banking access, according to our data.

Checking and Savings: Funding Investment Accounts

For banks, and especially for the neobanks that have been building debit and saving options, the shift toward offering equities trading, among other investment features, capitalizes on the fund flows into those primary day-to-day accounts, building an on-ramp to use some of those funds to launch trading.

The demographics are in place to support the strategy, and the U.S. offers a snapshot: Charles Schwab found in a recent survey that 3 in 5 Americans are investing actively and that, according to the data, “more than a quarter of Gen Z were taught about investing in school, significantly more than older generations.” A majority of those surveyed said they were poised to be in better financial shape than their forebears, and contended there are more ways to build wealth (cited by 50% of individuals), increased accessibility to investing (46%) and additional investment options available to them (46%). The average age at which the overall population surveyed started investing, said Schwab, was 30; for Gen Z it’s 19 years of age and for millennials, it’s 25.

Earlier this month, as PYMNTS reported, and in evidence of the expansion of the digital banking platforms, Revolut said it plans to add U.K. stocks to its trading platform. The company gained its U.K. trading license in November, has over 800,000 U.K. trading customers, and already offers U.S. and European equities. Separately, Revolut is reportedly building a rewards-based credit card that would use the RevPoints points system the company launched last year to offer rewards tied to debit card activity. The credit card based rewards will reportedly be rolled out in the U.K.

Online Investing Opens Doors to Checking and Savings

Investment platforms, too, are expanding: Robinhood launched a wealth management service at the end of last month that targets less wealthy clients. In a separate March announcement detailing the debut of Robinhood Banking, the firm said its banking platform would include checking and savings accounts; individual and joint accounts, and a 4% annual percentage yield (APY) on the savings accounts. The move comes a year after Robinhood launched its own credit card, issued by Coastal Bank. The company’s latest 10-K filing notes that revenue derived from its credit card business stood at $24 million. Credit card loans on the books were $391 million.

The platforms have installed bases of significant size: Robinhood has more than 25 million funded customers. Revolut said at the end of last year that it had passed a milestone of 50 million customers.

Traditional banks, of course, are also jockeying for these younger customers. In an interview with Karen Webster, Todd Clark, COO of digital investing platform InvestiFi, said banks that embrace white-label solutions to help customers utilize self-directed investment services can cement their own ecosystems with customers, keeping funds flowing between traditional checking and savings and investment activities.