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.