Stash, an personal finance app which makes it easier for millennials to save and invest small amounts of money, is taking a page out of rival Acorns’ book as it tries to add more customers.
The company announced Thursday that it has unveiled a number of new features for its users, including round-ups — which lets customers invest spare change— and cash back for purchases made at certain retailers.
“Round-ups,” lets Stash users round up daily purchases to the nearest dollar and automatically add the difference to their personal investment accounts. For instance, if you made a purchase of $6.55 at the nearby grocery store, the app will automatically round up the transaction to $7 and transfer the $.45 to your Stash investment account. It’s similar to a feature offered by investing app Acorns, which announced this week a $105 million funding round that values the company at $860 million.
The other feature, named “Smart-Stash,” uses algorithms to learn about users’ spending patterns and saves money where they can. Customers can also earn bonus rewards on everyday purchases if they link their credit cards or debit cards to Stash’s app, which offers up to 10% cash back on spending the money at selected vendors.
Brandon Krieg, CEO and co-founder of Stash, said Stash’s focus on educational content sets the app apart from industry competitors.
“Tens of millions of people in this country are effectively excluded from investing, saving, and engaging with financial services,” he said in an interview with Business Insider.”We think our customers make up 100 million people in the US alone because financial literacy and access are just not available to so many people now. So we created the platform where you can not only [start] investing, saving, and banking, but also learn why you do it and get advice.”
Stash allows users to open an investment account with as little as $5. The company’s goal is to change how people engage with financial services and empower those who lack knowledge of investments and wealth management, Krieg said. About 86% of Stash users identify themselves as first-time investors.
Right now, Stash charges users a $1 service fee per month and an additional 25 basis points for accounts over $5,000. It also charges $2 a month for retirement products unless the user is under age 25. Last year, the company expanded into banking through its partnership with Green Dot Corporation and offers bank accounts with no overdraft fees and free access to ATMs.
Founded in February 2015, the four-year-old New York upstart has amassed 3 million open brokerage accounts and around $530 million in assets under management. Acorns, in turn, has more than 4.5 million customers and over $1.2 billion in assets. The company was started by father-son duo Walter and Jeff Cruttenden in 2012. Both companies lag the biggest robo-advisor Betterment, which has $15 billion in assets under management, and brokerage giant Charles Schwab Corp, which handles $3.25 trillion of clients’ money.
But while fintech companies may have fewer customers than large brokerages, they’re still putting pressure on incumbent players to increasingly cater to younger investors with lower fees.