Digital Financial Platforms Convergence
Digital financial platforms are witnessing a significant convergence as neobanks and investment platforms begin to offer a hybrid set of services, further expanding each other’s domains. Neobanks are adding investment features such as equities trading, while prominent investment platforms are introducing traditional banking services like checking and savings accounts.
This convergence is largely driven by younger generations, such as millennials and Gen Z, who are particularly comfortable with both digital banking and investing apps. These tech-savvy audiences are shaping how financial services are delivered, with established and newer platforms expanding their offerings to capture more market share and create comprehensive financial ecosystems.
Neobanks have notably branched into investment services and credit card rewards, while investment platforms have begun integrating banking services. This trend reflects the growing role of apps as a primary digital gateway to a continuum of financial activities.
A report from PYMNTS Intelligence highlights that 60% of millennials, 57% of Gen Z, and 52% of Gen X primarily utilize mobile banking apps. An overwhelming 94% expressed satisfaction with their access to financial services, and 79% credited new technologies with enhancing their banking accessibility.
Checking and Savings: Funding Investment Accounts
For many banks, and particularly for neobanks focusing on enhancing debit and savings options, the pivot to equities trading capitalizes on the influx of funds into primary day-to-day accounts. This strategy provides an effective on-ramp for channeling funds into trading.
Charles Schwab’s recent survey provides a snapshot of societal shifts, revealing that a significant number of Gen Z individuals have been taught about investing in school, a much higher percentage than older generations. The survey further notes that a majority feel optimistic about being in better financial shape than previous generations, citing increased access to wealth-building options.
PYMNTS recently reported that Revolut plans to add U.K. stocks to its trading platform. With a U.K. trading license secured in November, Revolut has over 800,000 U.K. trading customers and already offers U.S. and European equities. The firm is also developing a rewards-based credit card linked to a points system from last year, initially to roll out in the U.K.
Online Investing Opens Doors to Checking and Savings
Investment platforms aren’t lagging behind. Robinhood, for instance, has ventured into wealth management services targeting less wealthy clients. Announced in March, Robinhood Banking’s new initiative offers checking and savings accounts, with a 4% annual percentage yield on savings.
This diversification comes after Robinhood launched its own credit card, issued by Coastal Bank, displaying $24 million in revenue and $391 million in credit card loans. The company boasts an immense customer base, with over 25 million funded accounts, while Revolut recently surpassed 50 million customers globally.
Traditional banks are also vying for these younger customers. In a recent interview with Karen Webster, Todd Clark, COO of digital investing platform InvestiFi, emphasized that banks leveraging white-label solutions to offer self-directed investment services can fortify their ecosystems by maintaining a steady flow of funds between traditional banking and investment accounts.
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