Serving the underserved investor: How Community Financial Institutions can bring investing inside to win

Consumer demand is shaping the financial services sector of the future, according to new research by Investifi.

DOVER, Del., Dec. 12, 2024 /PRNewswire/ -- As digital transformation reshapes the financial services industry, consumers increasingly seek easy, affordable and transparent access to investing options. While investing apps have made significant strides in this area, traditional financial institutions—particularly Community Financial Institutions (CFIs)—are uniquely positioned to lead the charge in offering digital investing solutions directly to their account holders. This is according to the latest research from InvestiFi, which focuses on providing digital investing solutions within the financial services industry.

The research, conducted by Censuswide with a sample of 6,004 U.S. credit union and retail bank users, highlights the urgent need for community financial institutions to offer in-house digital investing solutions to meet the increasing demands of today's account holders. The white paper can be downloaded here.

Kian Sarreshteh CEO at InvestFi comments, "The financial services industry is undergoing a technological transformation that is reshaping how consumers engage with their finances. A critical aspect of this shift is the rise of digital investing, where individuals manage their investments through user-friendly platforms designed to offer convenience, control and affordability. Historically, investing was a service mediated by financial advisors or brokerage firms. Today, digital tools have democratized access to investing, empowering even novice investors to participate in the financial markets with just a smartphone.

"We identify through this research just why financial institutions must integrate digital investing solutions into their service offerings promptly to stay relevant, engage account holders, and secure new revenue streams. Without these solutions, institutions are losing not just potential revenue, but also valuable customer relationships."

Key findings:

• 75% of investors are already using popular third-party apps like Fidelity, SoFi, and Robinhood to manage their investments. This highlights a strong demand for accessible and user-friendly platforms.
• 24% of investors never transfer money from their investment accounts back into their bank accounts. For financial institutions, this represents not just an outflow of assets, but a missed opportunity to build deeper relationships with those account holders.
• 63% of investors don't move money back to their financial institution because it's easier to leave it in the investing account for future use. This means that funds flowing out to these investing apps rarely come back to the financial institution, further impacting liquidity and lending opportunities.
• Stocks are the most popular investment choice across all age groups representing 65% of all investments made, with extreme interest among older demographics (45-54 and 55+).
• Mutual funds (65%), cryptocurrency (38%) and ETFs (23%) are also popular, with younger age groups (18-34) showing a higher interest in cryptocurrency than older investors.
• Millennials and Gen Z in particular, demand digital-first, self-directed investment options. For these generations, convenience is essential—they want to invest with just a few taps on their smartphone, accessing user-friendly platforms that allow them to manage their portfolios effortlessly and on their own schedule.

Sarreshteh continues, "The rise of digital investing is undeniable, and financial institutions are at a critical juncture. They must act now to offer these high-demand solutions directly to their account holders or risk losing them—and revenue—to fintechs like Robinhood and Sofi.

"Trust is one of banks and credit unions' most significant advantages over external investing apps. These institutions have long-standing relationships with account holders, who rely on them for security, reliability and stability. The future of investing is digital, and financial institutions must take the lead to ensure they remain at the center of their account holders' financial lives in this inevitable digital future," concluded Sarreshteh.

About InvestiFi

InvestiFi, Inc. is the only WealthTech platform designed to allow for investing directly from checking accounts, enabling Credit Unions and Community Banks to retain more assets and attract new members. Through its exclusive funds flow and user-friendly interface, InvestiFi empowers every Credit Union and Community Bank to provide their account holders with the ability to navigate the complexities of financial markets with ease from within their current online banking experience. At the heart of InvestiFi's mission is the goal of democratizing investing and supporting community financial institutions, ensuring that wealth-building opportunities are accessible to everyone.

SOURCE InvestiFi