Heads up, making your money work is the best way to accumulate wealth in the long run.
And I mean not just investing your own assets, but building a fintech solution for others.
Previously we spoke about the reasons to build a stock tracking app for professional investors. But there’s another booming market you might have missed – micro investing. The idea of investing your change started gaining traction in 2015 and two years fast forward, it still remains hot among the consumers and startup investors.
Sounds intriguing? We thought so too!
If you plan to build a mobile app for investors, you should start with identifying and researching your target market first. And we already did some digging for you.
Why Micro-Investing is a Hot Niche For Startups
Micro-investing has become on the most prominent fintech trends in 2016. Millennials were especially active to embrace it. Guess why?
This generation is not fond of banks in the first place. Scratch, an in-house research division of Viacom, has created the Millennial Disruption Index – a data-backed library stating that “banking is at the highest risk of disruption” right now. And they discovered even more curious insights:
- 71% of millennials would rather go to a dentist than listen to a banker.
- 73% of respondents feel more excited about new financial offerings from the likes of PayPal, Google, Apple and Amazon than of their banks.
- Nearly 50% are counting on tech startups to introduce new innovations to the financial space.
So this data clearly indicates that banks should work more on establishing trust with this consumer segment and offer better m-banking solutions (which are also in high demand right now).
But there’s more to that. Another recent survey conducted by Investr. indicates that apart from the daily financial struggles, millennials are seriously concerned about their financial future:
- 70% of respondents admit that they feel worried about their future finances.
- 77% indicated that investing is important for growing their future assets.
- Yet, 35% of surveyed said that they don’t feel comfortable with stock investments and 38% mentioned that they feel only “somewhat comfortable”.
- Out of those millennials who do invest their assets, 77% said that they did the majority of their banking and investing operations through mobile devices, tablets or computers.
Okay, now that’s some solid data justifying the need more investment app development. But why choose the micro investment route?
Go Banking published a detailed survey stating that 69% of Americans have less than $1,000 to their name in savings. Most millennials are doing even worse:
Next, the price of professional investment portfolio management is quite high. Apart from that, even the safe investment options like mutual funds are not that safe at all. According to Forbes, between 2001 and 2012, 7% of mutual funds were failing every single year. And within the same time period mutual funds have raised their fees by 84% – from 0.62% of assets to 1.15%.
If that doesn’t sound much to you, here’s a graph illustrating how much you are paying the bankers up till you receive access to your funds:
All of those factors combined have resulted in the rise of micro-investing. After all, investing $20 in 100 different ventures is safer than putting in $2.000 in one business (that may fail).
Yet, managing such highly diversified portfolios is challenging without the necessary tools. And that’s exactly where micro investing apps like Acorns shine.
Acorns: Making Automated Micro-Investments Easy
If you somehow missed the hype, here’s a quick recap of what Acorns does.
The app rounds up your purchases and automatically transfers the “change” into your investment portfolio. You can then invest as little as $5 or set up recurring investments through the app.
You can link unlimited cards, transfer or withdraw money anytime and receive cash backs from a selected list of partners. Additionally, the app delivers real-time visual reports of your investment portfolio, along with tips for managing your finances better.
Acorns is a mobile-only solution, available both as an Android and iOS app.
The company now reports having $76.3 million under their management and over 1 million user accounts. The average user balance, however, is just $156.
But as Carol Knight, operations director of Tisa pointed out:
“One of the primary challenges the [micro investing] industry faces is reigniting the savings culture by making it easy for people to save very small levels of money frequently.”
Acorns isn’t the only popular micro investing app out there. Stash app launched in October 2015, has closed a $25 million Series B investment round in December 2016. Money Box is a popular UK alternative to Acorns. And Clink is another new app, which allows even $1 investments:
There are not as much popular investment apps for Android just yet. However, according to Microfinance Market Outlook Report, micro investing is actively growing in the emerging markets. So you might be thinking towards that direction as well.
So, how do you create a mobile investment application that gets traction among the consumers?
Make Investing Sound Simple and Engaging
Part of Acorns massive success was the app’s design and functionality simplicity.
The founders’ main goal was to make the whole process really seamless and reduce the stress around parting with money. Funds from the linked cards are transferred automatically and rarely go above a dollar.
If you want to develop an investment app that is popular with the average consumer, not a pro investor, keep the features minimal.
Create a simple, sleek interface that would show all the incomings and current account balance. The available investment options should be also presented in a coherent manner, along with the financial analytics.
Here are a few additional product ideas:
- Allow users to choose how much money they want to transfer from each transaction. Some may feel fine with the cents, others may want to increase the sum once they build up the confidence in your custom product.
- You may want to include a financial planner that would advise users how much they need to invest per month if they want to accumulate N dollars in 1-5 years.
- Allow users to set up automatic monthly/weekly withdrawals.
- You can develop a smart notification strategy that would inform users of new hot opportunities or financial market fluctuations.
- Clearly, communicate the possible ROI of each investment done through your app.
- You can include a “nudger” that would remind users that they have un-invested funds in their accounts.
Figure Out How Much Do You Plan To Charge
Again, different investing apps have different monetization strategies:
- Acorns, Clink and Stash charge $1 per month for those accounts with a balance under $5.000 and .25% for those with an annual balance of $5.000+
- Money Box similarly takes £1 per month for your account and an additional 0.45% of the value of your investment per year.
Make sure that you clearly communicate all the imposed fees to the users.
Proactively Offer Financial Advice
Mind that your product is not designed for professional investors, who are familiar with the lingo and the common asset management rules.
If you want your business to grow, you need to continuously educate your user base and offer them even better ways to invest their funds.
That could include the following:
An onboarding survey that would help users to formulate their financial goals and provide you with more insights on personalizing their portfolio.
Betterment does a great job here:
You can include a virtual trainer that would allow users to trade stocks or make investments with virtual currencies before giving in the real money.
Make it social – show how their friends are investing. Users can observe how their peers are investing money and learn from their experience. Or they can choose to follow the investments of their connections on social media.
That’s actually what Openfolio app does:
You may introduce an “Advisor role” aka verified investors, who can become mentors for others and create investment syndicates within the app. Again that should encourage more reluctant types to invest.
And of course, interactive in-app guides, smart analytics, and robo-suggestions can improve the users’ financial literacy. Yet, do mind the cost to make a mobile app for an investing company as a great fintech solution can easily go up and beyond $100.000 in development money.
The next logical step is to create a detailed app specification list to receive accurate project quotes from the developers. You can download our template here or contact us directly if you’d like to discuss your app idea!