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Apps bring banking to phones, millennials

As studies reveal how millennials lack an interest and knowledge of investing, apps work to make the process easier to navigate on a familiar platform. ORACLE PHOTO/ADAM MATHIEU

Investing is no longer an old man’s game. With the help of several app developers with the unified goal of introducing millennials to the world of finance, the transition is clearer than ever. 

Of millennials, 93 percent report a distrust of financial markets and a lack of knowledge about investing, which lead to them feeling less confident and less likely to invest, according to a Capital One ShareBuilder survey. An article in CNN attributed this distrust to the 2008 financial crisis, intimidation by fees and a lack of transparency.

However, several apps designed to ease the tension for young investors have been making a splash on campus. From Acorns, which rounds up purchases to the next dollar and invests the change in stocks, to Pennies to Digit, developing technology hopes to revolutionize how millennials handle their finances.

“For younger people, it’s an easy-to-use, nice-looking interface,” Claes Bell, a mobile analyst at, said. “I think it’s convenience, something they can use quickly and be finished with and receive a benefit over time. So they know if they’re putting effort into a budgeting app or something. … They’re going to have useful information about what they’re spending their money on.”

Among the most common of these apps is Acorns, the product of father and son team Walter and Jeff Cruttenden.

The app links with credit or debit cards to track spending and automatically round purchases up to the next dollar. That spare change turns into stocks, and members are also able to schedule deposits as well. In an article in Fortune, Jeff said of the $100 users invest monthly on average, $55 comes from automated withdrawals using the rounding algorithm.

“One of the beautiful things about Acorns is that we’ve made it really easy,” Taylor Dance, a campus program manager for Acorns in an interview with the Crimson White. “We do all the hard work for you, so the investments and your portfolio will be automatically balanced … we allow you to save and invest in the background of life.”

The app matches each user with one of six investing profiles based on a series of questions about the person’s investing goals. Each profile was influenced by Nobel Prize winning economist Dr. Harry Markowitz and ranges from conservative to aggressive risk.

While Acorns usually costs $1 a month, it became completely free for students in April when it was only eight months old and had 80 employees with 650,000 members. Three-quarters of users were under 35.

Another popular option for young adults interested in investing is Pennies, designed by Emile Bennett.

A freshman majoring in music studies and criminology, Heather Headrick became interested in budgeting while completing the financial literacy class required of all USF freshmen.

“I never really thought about doing that before but taking that course before I took my classes really got me thinking about how much money I was actually spending,” she said. 

She said this interest led her to the Pennies app, which aids users in tracking expenses. Pennies allows the user to set up budgets and input the money he or she spends. It displays the amount of money the user can still spend and stay within the budget. However, it does not say where the money is being spent or links with a bank account, which means it has to be input manually.

“The prototypical Pennies user is young — no family or kids — has a steady income, and has pretty straightforward recurring expenses, like rent and bills and beer,” a review of the app in Wired said. 

“This kind of user doesn’t need charts or digital ledger balances, he just needs to know if buying that new pair of shoes is going to blow his weekly budget or not.”

Another option for the adolescent investor is the app Digit, which provides a slightly subtler approach.

Digit connects to the user’s bank account, evaluates his or her spending habits with an algorithm and removes small, “unnoticeable” amounts of money from the user’s bank account into a savings account the app creates for the user in partnership with the bank. The account can be accessed at any time. Users can also manually set amounts to be withdrawn at regular times.

“But what appears to have gotten some people boggled was the fact that the users don’t earn any interest on their savings,” Business Insider said of the app. “Instead, Digit takes all the interest that accrues and spends it on its operating costs. 

“Its logic: users get free access to Digit and save money they normally would have spent elsewhere.”

When the app launched in February, reports said it was saving users $1 million a month, but by May was saving them $1 million a week — and in that time, its user base increased ten times, according to Business Insider. Digit CEO Ethan Bloch said its users are primarily millennials and low-income workers. 

According to Forbes, millennials are set up to inherit $41 trillion from their parent’s generation, and millennial financial behaviors have the potential to redefine financial services. 

“One thing that sometimes worries me with these financial apps is that I have to provide sensitive account information so that they can track my finances when helping me save,” the Huffington Post’s Simon Zhen wrote. “How secure are they? Can I trust them with my account information? I prefer to not worry about that all the time. 

“However, if you want another way to save a little here and there, it can work to your advantage to use a savings app like Digit or Acorns.”