Getting millennials to invest their money is easier said than done.
That’s why Neel Ganu, founder of fintech startup Finch, wants to make investing as easy as swiping your debit card at a coffee shop.
Ganu, an MIT Sloan School of Management grad, has launched an all-in-one checking and investing account specifically for millennials. Rather than opening a checking account with a major bank, users can open one with Finch, receive a debit card, then go about spending like normal. But unlike traditional banking apps, the Finch app takes digital banking one step further by investing money sitting in the account.
“As you deposit into that account, we automatically invest that money for you into a portfolio of exchange-traded funds,” Ganu said. “You can go to Starbucks. You can swipe [your] card for a cup of coffee. You’ve just paid for this cup of coffee with a fractional part of your portfolio, completely commission-free.”
From Ganu’s point of view, millennials are the most overlooked segment when it comes to financial services and have the most to gain by investing. Getting millennials to invest without having to change their spending habits is one way Ganu wants to solve inequalities in wealth and improve access for those who have been left behind.
Customers can open an account by searching for “Finch checking and investing” in the App Store on their mobile phones. Once money is deposited into their account, they can request to be issued a Finch debit card, which can be used at 55,000 ATMs across the U.S. with no fees attached.
Then, users can choose between two investment portfolios. Finch’s Stable Package portfolio gets users a return comparable to that of a savings account. The second option is a Growth Portfolio, which is invested into traditional stocks, bonds and cash.
Finch makes money each by charging merchants card processing fees. The startup also charges a nominal monthly fee for its Growth Portfolio.
Ganu said removing barriers to investing was at the core of his decision to develop Finch with a team of six people based in the U.S. and eight abroad. Prior to graduating from MIT, Ganu worked for Fidelity in Boston and at big European and Asian banks. He felt that more could be done to do better by the customer.
“The old saying that banks are making money off the people that can least afford it still rings true and that’s something we want to change,” Ganu said. “We want to align our interests with our customer’s interests.”
Finch’s new platform launched in mid-November with investment options for its customers.
The company raised $1.8 million in a seed round in September led by Boston-based Mendoza Ventures. It had previously graduated from Barclays’ fintech accelerator in New York City.
Jordan Frias is a contributing writer for BostInno.
