The year is 2017 and if you haven’t been living under a rock then you will know it is a year of change. For instance, the recent general election saw an unprecedented young voter turnout of 72%. That’s right, turns out young people actually ARE engaged in politics and they CAN be bothered to turn up to the polling booths. It’s a crystal clear indication that times are changing and that the mindset of Millennials is changing alongside them.
The idea that Millennials and Generation Z are terrible money managers and live off the ‘Bank of Mum and Dad’ is changing too. The fintech revolution is in motion and we now have Apps that are turning our youth into money savvy, first-time investors and stockholders of global brands such as Apple and Disney.
Step forward… Micro-investing
Micro-investing is the act of saving very small amounts of money on every transaction you make and investing the money you have built up. This is done by pairing your debit card to a Micro-investing app then on every purchase you make, the ‘spare change’ gets rounded up and funnelled into your fund.
For example, if Pete pays £3 for his £2.40 morning Latte from Starbucks, he would receive 60p change that would go straight into his pocket. Let’s face it though, this never really amounts to anything and often gets lost when you shove your trousers in the washing machine with that forgotten-about change still in there.
However, if Pete has a micro-investing account and decides to pay on his card, the 60p change will be automatically diverted directly to his fund on his Micro-investing app. Do this a couple of times a day on all your card purchases and you can be coming out with a pretty penny at the end of the month.
Once Pete has saved a bit of money he can choose to invest his money into low, balanced or high-risk investments. It’s such a simple and effective idea, and it makes you wonder why it hasn’t been around since the dawn of the digital revolution. So let’s take a closer look at the only micro-investing app available in the UK and its approach to captivating its millennial target audience.
Launched back in August 2016, Moneybox has sent shockwaves around the UK fintech landscape. After a very successful launch Moneybox won ‘Fintech Innovator of The Year’ at Techworld’s ‘The Techies’ awards in February 2017. At this moment in time Moneybox is only available on iOS but an Android version is on the way. With an online portfolio of 6000 worldwide companies to invest in, such as mega brands Apple, Disney, Nintendo and Facebook, Moneybox is offering users the chance to invest and own stock in the very companies they live and breath.
Perhaps the main reason millennials struggle to save is because it’s becoming increasingly difficult to do so in the current economic climate: low paid jobs leave little disposable income to be set aside. American Global Investment Management Corporation, BlackRock has backed this up with research which states that “More than 80 per cent of the UK population don’t save regularly because they don’t have a disposable income.”
The innovative new way of saving being spearheaded by Moneybox is specifically designed for the younger person, who would usually struggle to save through traditional means. And there is no doubt Micro-investing has legs. It actually does work as Techworld has calculated: “It’s small change, but given the average user makes 120 transactions per month and rounds up on average 28p per transaction, that’s about £36 saved each month and about £440 saved per year.”
While the Moneybox app itself is well designed, clear and transparent, the most critical thing about it is that it’s easy to use and easy to understand. This, as we know, goes a long way with millennial users. Moneybox’s approach to digital marketing is also worth noting. Micro-investor apps as a whole are tearing down old stereotypes about millennials when it comes to finance and this is perfectly depicted in one of Moneybox’s online ads.
With 3.3M YouTube hits, Shazza vs. The Banker shows a dramatised stereotype millennial sitting next to a banker. The Financial Times-reading banker patronises Shazza by reeling off the classic phrase “You kids these days have got no idea.” But little does he know, Shazza is in fact a money savvy micro-investor who has saved £1000 in a month using money box, and is seeing “bare returns” from her investments.
This perfectly portrays what Micro-investor apps are aiming to do. They are tearing down old stereotypes and showing millennials that the stock market is not as scary and confusing as they may first think.
Only time will tell how popular and widely used Micro-investing apps will become. If you are measuring its success over the first months of operation then you can safely say that Micro-investing will become THE way the younger generation choose to save.