A piggy bank on your phone
Eliminate jargon, cut out forms, replace long processes and do away with the financial adviser. Is this the way to get millennials to invest?
SA isn’t known for its savings culture, especially among the youth. Too many people who have just entered the workforce don’t know where to start, and can’t get their heads around the jargon used in the world of investment.
Enter Liberty Life, which has developed an app it believes will draw millennials into investing. Called Stash, the app is designed to remove the complexity associated with investing.
It is targeted at 18- to 28-year-olds, most of whom have never invested before.
"Investing should be as easy as tweeting — that’s the goal of Stash," says Juan Labuschagne, head of development at the app.
Stash lets its users invest their spare change in the JSE Top 40 index by "rounding up" change linked to daily transactions and investing it in a tax-free savings account.
It is compatible with the debit, credit and cheque cards of the big four banks, as well as those of Discovery, Investec and RMB.
It should soon also include Capitec cards.
The app aims to cut out intimidating jargon, tedious forms and long processes; it also cuts out the time it would take to meet with a financial adviser.
It is free to use, with no charge for transactions.
The concept of the app isn’t new. "It has been done before in a similar way for a more sophisticated type of investor internationally [using] a bunch of jargon," says Labuschagne.
"With Stash, we wanted to remove all barriers. More importantly, overseas apps require Internet banking details. In SA, that’s a big no-no," he says, as local users are too concerned about safety to share Internet banking access with an app.
Stash invests the money into a tax-free savings account, which allows funds of up to R33,000/year and R500,000 over a person’s lifetime.
The app is available for download on Android for now, and it requires a Google account to sign up. After that, R50 credit is awarded to new users, with an additional R10 per user for every referral.
The app requires a bank card number with expiry date and CVV number, all of which are protected by a sign-in PIN code. Labuschagne says the process is similar to paying a merchant with a mobile payment system such as SnapScan, where all card information is encrypted on the app and not stored on an external server.
Stash has access to users’ banking transactions and bank SMS messages, which means it can round up their daily spend and "stash" an amount of their choice between R10 and R50.
The app works in the background by accumulating spare change, without interfering with your day-to-day life, says Labuschagne.
"Stash checks your daily bank balance and never transfers more than you can afford, so you don’t have to worry about going into overdraft."
Liberty claims users’ investments will grow from day one. If a university student who is doing a master’s degree stashes R10/day for five years, she would have R22,035 by the end of her studies.
Unique to Stash — and a pretty cool SA-first — is that Financial Intelligence Centre Act registration takes place inside the app. Users can submit a copy of their ID and a screen shot of a recent proof of address when requested to do so. However, this does not happen when they sign up initially, but when they invest more than R2,000/month, or if they want to cash out.
Another way to save is through the quirky "Sunny Money" feature, which millennials are likely to embrace.
For every sunny day, you can opt to stash between R5 and R20, or the equivalent of the maximum temperature on the day. A monthly limit can be set for this.
As expected with any free service, the user is the product. Labuschagne says Liberty is offering the service at no cost to build its brand and increase its engagement with a new crop of investors. "If we engage with people on their terms, perhaps they will consider Liberty Life for other products and services," he says.
In the chase for data, Liberty also wants to know more about its customers. "We’re interested to see how their habits [will] have changed in 20 years’ time."