Digital Platforms Convergence: Neobanks and Investment Platforms Merge Services
As digital platforms converge, neobanks are expanding into investment features while investment platforms are adding banking services like checking and savings accounts. This trend is largely driven by younger generations. Millennials and Gen Z, comfortable with digital banking and investing apps, represent a key demographic pushing this transformation. Established and emerging platforms are strategically expanding their service offerings to capture market share and build comprehensive ecosystems.
The move by neobanks to branch into investing and credit card rewards, and investment platforms to introduce banking options, underscores the appeal of apps as a seamless digital gateway for financial activities. According to PYMNTS Intelligence, 60% of millennials, 57% of Generation Z, and 52% of Generation X primarily use mobile banking apps. Additionally, 94% reported improved access to financial services through technology, and 79% highlighted enhancements in banking access.
Checking and Savings: Funding Investment Accounts
Neobanks have been leveraging the shift towards offering equities trading and other investment features, capitalizing on fund flows into their primary day-to-day accounts as an on-ramp for trading. In the U.S., a snapshot of this trend is evident as surveyed by Charles Schwab. The survey revealed that three in five Americans are actively investing, with Gen Z showing early financial literacy; more than a quarter learned about investing in school. The average age for starting investments is 30, but Gen Z starts at 19, and millennials at 25.
Revolut, a digital banking platform, exemplifies this merger of banking and investment services. Recently, Revolut announced plans to add U.K. stocks to its trading platform, after securing a U.K. trading license and gaining over 800,000 U.K. trading customers. Already offering U.S. and European equities, Revolut is also reportedly developing a rewards-based credit card that will utilize its RevPoints system linked to debit card activity, expected to roll out in the U.K.
Online Investing Opens Doors to Checking and Savings
Similarly, investment platforms are expanding: Robinhood launched a wealth management service targeted at less wealthy clients, and in a separate announcement, introduced Robinhood Banking, which includes checking and savings accounts, as well as a 4% annual percentage yield on savings accounts. This comes a year after Robinhood introduced its own credit card via Coastal Bank. Robinhood’s credit card business earned $24 million in revenue, with credit card loans reaching $391 million according to their latest 10-K filing.
Both platforms boast extensive user bases. Robinhood has over 25 million funded customers, while Revolut recently surpassed 50 million customers globally.
Traditional banks are not left behind in this race to capture younger customers. According to Todd Clark from InvestiFi, banks using white-label solutions to facilitate customers’ self-directed investment services can strengthen their ecosystems, ensuring a continuous flow of funds between traditional banking and investment activities.
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