Future of Investing

Microinvesting app Stash is rolling out bank accounts

  • Stash Invest joined the ranks of investment startups moving into banking
  • Though the field is crowded, Stash is aiming for underserved customers

Email a Friend

Microinvesting app Stash is rolling out bank accounts
Stash Invest is the latest non-bank fintech startup to create banking products for customers with the upcoming summer launch of its checking accounts and debit cards. The 3-year-old startup is the latest investment company in the space to extend its reach into banking, following MoneyLion, Wealthsimple and SoFi, all of which have similar product roadmaps. While the field of startups offering banking products is getting quite crowded -- the growth of banking-only startups like Chime and Varo also adds competitive pressure -- a Stash spokeswoman said banking has always been part of its plan to offer a full-service financial platform for "an underserved market." The average age of a Stash customer is 29, with an annual household income of $45,000 — a population traditional banks don't reach effectively due to high account minimums, and it's a consumer group that's often not considered very profitable by big banks. "Our clients are paying up to $300 a year in banking fees," she said. "We want to alleviate those stresses and create an environment where the client knows and feels that the [banking] institution is working harder for you, and teaching you along the way." Stash plans to do that by offering a bank account that doesn't charge overdraft fees and gives customers access to a "large network" of free ATMs across the U.S. Stash's microinvestment platform is designed to help users who maintain a $5 account minimum create automated deposits into savings and investment accounts. It also offers clients personalized investment advice. Despite the quick growth of startups moving into banking, the underserved population is big enough for Stash to make inroads -- a market size it claims is as big as 100 million. By growing its product offerings beyond investments, Stash is aiming to increase customers' interactions with the platform -- a customer retention and acquisition move. Beyond the underbanked population -- the latest FDIC numbers count 24.5 million households in this category -- Stash is aiming to grow its reach among a population that doesn't feel well served by major banks. "Banks are not connecting with Generation Y and Generation Z, and neither are traditional online brokers, so for that reason, it's fair game for fintechs," said Aite senior analyst Javier Paz. Stash said it has no plans to become a bank, and the move to become a central financial hub is something Stash customers have been demanding, Ed Robinson, co-founder and president, recently told Tearsheet. "We’ve always had the same mission of getting people off the sidelines, he said. "You can’t just try to build the next JPMorgan. We build deep relationships with our customers … but we’re broadening our offering to continue to help.” Beyond deepening the connection with customers, banking products are new revenue drivers beyond subscriptions and investment fees. Stash charges its customers $1 per month, and 0.25 percent of assets under management for accounts with more than $5,000. "Markets are going to continue to be cyclical, so you're vulnerable to having lower revenues," said Celent senior analyst Alenka Grealish. "[Bank accounts] are a good revenue stabilizer." The banking bundle is the third recent product launch from Stash, which has 2 million investment customers, and, as of March 2018, had $319 million in assets under management. In February, it added a product that lets customers create investment accounts for their children, and last month, the company permitted its customers to invest in single stocks. The company raised $37 million in Series D funding led by Union Square Ventures in February.

0 comments on “Microinvesting app Stash is rolling out bank accounts”

Future of Investing

‘Would you rather talk about your weight or your money to your friends?’: Acorns’ Kennedy Reynolds

  • In 2021, 60% of Americans couldn't pass a basic financial literacy test.
  • Financial platforms consider it their responsibility to educate customers and offer the tools to help them make good life decisions.
Subboh Jaffery | March 07, 2022
Future of Investing, Member Exclusive

AT&T’s Cricket Wireless strikes partnership with Acorns to bring investing to its subscribers

  • Cricket Wireless and Acorns are teaming up to bring investing to more people.
  • With the Acorns app pre-installed on new handsets, Cricket customers also receive monetary incentives to use the investment app.
Zachary Miller | August 06, 2021
Future of Investing, Member Exclusive

‘Lots of music involved, too!’: A day in the life of Chidi Achara, CCO of Stash

  • Consumer interest in investing is taking hold. And for investing apps, that means sharpening their marketing game to reach their target audience.
  • Leading Stash’s marketing initiatives is Chidi Achara, chief creative officer at Stash. Here’s a day in his life.
Rivka Abramson | August 02, 2021
Future of Investing, Member Exclusive

Behind Betterment’s partnership with Zenefits to give SMBs access to retirement planning

  • Betterment’s technology led 401(k) provider teamed up with HR software company Zenefits.
  • Zenefits SMB customers will gain access to Betterment’s retirement planning and financial wellness offerings.
Rimal Farrukh | April 21, 2021
Future of Investing, Member Exclusive

‘We put our skin in the game’: How Clearbanc is rethinking funding for growing startups

  • Last month Clearbanc released ClearAngel, a program that acts as an automated angel investor.
  • Clearbanc’s revenue-based model speaks to the increased need of startup funding.
Rivka Abramson | March 04, 2021
More Articles