The financial landscape is evolving rapidly, with digital investing reshaping how individuals manage their finances. Traditional financial institutions, long seen as anchors of security and trust, now face the challenge of adapting to this shift. Research commissioned by InvestiFi offers insights into a critical analysis of what these institutions can do to reclaim their role within the financial ecosystem. To remain key players in their customers' financial journeys, the path forward requires understanding investor behaviors, counteracting current trends, identifying opportunities and embracing innovation to meet investor expectations.
Understanding investing behaviors
Investing has never been easier. With the rise of third-party investing apps, platforms like Cash App, Fidelity and Robinhood have completely transformed the process of managing investments. According to InvestiFi’s research:
- 36% of investors use Cash App
- 18% rely on Fidelity
- 16% turn to Robinhood
Their success hinges largely on simplicity, accessibility and seamless functionality, qualities that resonate strongly with modern investors’ lifestyles.
When convenience becomes a priority, traditional institutions risk losing ground. According to InvestiFi’s findings, 66% of respondents regularly transfer money into their investment accounts each month, while 24% rarely move these funds back to their bank accounts.
More telling is the fact that 63% primarily keep funds in third-party accounts for continued investing rather than transferring it back to banks. Equipped with this understanding, financial institutions can prioritize convenience, offering seamlessly integrated digital investing services and other effortless, responsive solutions to re-engage these investors.
The segmentation of consumer relationships
The growing dominance of fintech platforms also highlights another critical gap: access to consumer data. These platforms gather extensive insights into investor behavior and preferences, enabling them to offer tailored experiences and services, further segmenting the financial institution, customer relationship. InvestiFi’s research reveals just how integrated these platforms have become in users’ financial lives. In addition to investing:
- 65% of respondents have a debit card linked to a third-party investing app
- 45% have a checking account
- 46% use direct deposit
- 18% use bill pay features
- 15% rely on these apps for credit cards
This diversification of services makes third-party apps more integral to consumers' financial lives, and takes away from investors' relationships with their traditional financial institution. To counter this, financial institutions should focus on developing integrated digital ecosystems that unify banking, investing and everyday financial activities within one seamless experience—regaining both visibility and loyalty in their customers’ financial lives.
Financial literacy trends among investors
Traditional financial institutions have a significant opportunity to excel in an area where fintech platforms often struggle: financial literacy. This, coupled with convenience, presents a key advantage for them. According to the research, the top five most popular resources for investment education and insights are:
- Internet searches
- No source at all
- Advice from family and friends
- Independent financial advisors
- Finance influencers (e.g. YouTube, Instagram, TikTok)
Four out of five of these sources are not necessarily credible. This fragmented approach opens the door for financial institutions to step in as trusted educators by offering workshops, webinars and tailor-made financial resources. By taking on this role, institutions can establish themselves as indispensable partners in their customers' investing journeys.
The road forward: embracing digital investing
Digital investing isn't just on the rise, it’s reshaping the entire financial landscape as we know it. For financial institutions, the call to action has never been more urgent. With their established relationships, inherent trust and substantial infrastructure, these institutions are perfectly positioned to spearhead this digital revolution. However, success hinges on their willingness to innovate and reimagine their role in an increasingly digital world.
By rolling out integrated digital investment services that prioritize ease of use, comprehensive financial education and personalized experiences, financial institutions have a golden opportunity. They can turn the tide, transforming potential challenges posed by fintech competition into strategic advantages. This is more than merely keeping pace—it’s about setting the standard and recapturing market dominance.
The insights from InvestiFi’s report serve as a powerful blueprint for this shift, urging financial institutions to evolve, adapt and lead the way toward a more inclusive and empowered financial future. To read the full report, visit InvestiFi’s website.
Author Bio: Albert Kang joined InvestiFi as a seasoned veteran in the credit union space with over 10 years experience. He was the Vice President of Deposits and Business Relations at CapEd Credit Union where he was responsible for the strategic planning of the deposits portfolio and applicable revenue streams. In his nearly a decade of experience at CapEd, he oversaw Treasury Management, Consumer Deposits Operations, Quality Assurance and Wealth Management. He also served as a member of CapEd Credit Union’s Asset and Liability Management Committee which was responsible for effective balance sheet management to mitigate risks, optimize profitability and achieve strategic objectives for the credit union.
Prior to CapEd, he was AVP, Treasury Management for Zions Bank where he optimized revenue generation within assigned portfolios.
Recognized as an Idaho Business Review’s “Accomplished 40 Under 40″ and “Excellence in Finance.” He also holds the designation of Certified Credit Union Financial Counselor (CCUFC) from Americas Credit Unions. Albert is dedicated to leverage his expertise to foster economic empowerment and advance financial wellness in our communities.
