By Eko
When credit unions evaluate digital investing, one question always comes up:
"If we make it easier for members to invest, aren't we just moving money off our balance sheet?"
It's a fair concern, but the answer isn't so straightforward.
If you don't offer digital investing, your members will invest elsewhere, and every dollar builds a relationship with someone else. If you do offer it, that same behavior can work in your favor.
How do you know if digital investing is right for you? Here's where to start.
Pull two years of ACH data and sort outbound transfers by destination. You're looking for two groups.
The first is the traditional brokerages: Schwab, Fidelity, Vanguard, E*Trade, etc. The second is the fintech apps: Robinhood, Acorns, Betterment, SoFi, Cash App, etc.
Then compare two things: the number of transfers per month and the average size of those transfers.
The transfers to traditional brokerages are often bigger and less frequent. They tend to come from older members funding investment accounts they've held for years.
Fintech transfers are often the opposite. The amounts are smaller, transfers are automated, and there are far more of them.
It's not uncommon for credit unions to find twice as many monthly transfers going to fintech apps as to the traditional brokerages.
A $10 weekly transfer may not look like a threat, but low-dollar investing is how fintechs open the door.
Once a member is investing, more offers follow: high-yield savings, early wage access, debit cards, and direct deposit incentives. No single product ends your relationship, but together they add up to a full banking relationship acquired for the price of a $10 weekly transfer.
Traditional brokerages pull large deposits off your balance sheet. Fintechs pull the entire member relationship.
Offering investing in-house doesn't keep investment dollars on your balance sheet, but it does keep everything else.
The checking account behind the investment stays with you. So does the cash they haven't invested yet. Distributions land in their accounts with you instead of at another bank. And what they're investing in becomes visible to you.
Investing also changes how members behave. Members who invest through Eko log in to digital banking 3.8x more often than those who don't, and they're 6x less likely to leave their credit union.
It's the same dynamic the fintechs are using. The only difference is which side of it you're on.
Investing can either be your biggest source of deposit leakage or your biggest source of deposit protection. It's just a question of whether you're using it. Every credit union's numbers look different. If you'd like help conducting an analysis, we run it with credit unions regularly.
Connect with the Eko team and learn more.