NEW YORK (Reuters) - Stash, a New York-based startup that lets individuals make micro-investments through a mobile app, will launch free bank accounts aimed at low-income U.S. consumers.
The company is in the process of inking a partnership with a licensed bank in order to launch the accounts in the first quarter of 2018, which it hopes will make it easier for its customers to save money, it said on Thursday.
The accounts will be insured by the U.S. Federal Deposit Insurance Corp, will have no minimum balance requirements and will be connected to a debit card, Stash said.
Stash is one of a swathe of technology startups that are taking advantage of automation to reduce the costs of offering services to consumers that have been traditionally overlooked by mainstream financial firms.
Launched in 2015, the startup offers a mobile app that enables consumers to invest as little as $5 in a batch of over 40 exchange traded-funds curated by the company’s investment team.
It targets consumers with an average annual income of $50,000, which it sees as a mass market.
“By building a banking product we are able to give them more advice about how to save for goals,” Brandon Krieg, CEO and co-founder of Stash, said in an interview.
More financial technology startups have been looking to expand the breadth of products they offer as the sector matures.
Online wealth management startup Wealthfront said in April it would start offering loans, while payments company Square said it would apply for a an industrial bank charter last month.
“We don’t think banking is much different than what we are doing,” Krieg said. “Our focus has always been on financial education and making people save and invest for their future.”
The company, which said it has 1.2 million clients, has raised $78 million from investors, including Coatue Management and Valar Ventures, the venture capital firm of PayPal co-founder Peter Thiel.
Reporting by Anna Irrera; Editing by David Gregorio