Every time I look at Robinhood getting a new investor and most recently Acorns, it strikes me that a mass consumer wealth app isn’t the ‘next big thing’. It's the current big thing.

We've moved on from robo-advisors (note to bankers: If you have an internal project to build or invest in a robo you're probably doing it wrong) to something more impactful.

What's in a Wealth App?

If you've missed the phenomenon then here are some numbers for you. Robinhood has 4 million customers (that's more than e-trade financial) and is valued at $5.6bn.

Acorns has more than 4.5 million customers and just raised $105m and signed a content deal with NBC Universal around financial literacy.

They both raised their last round of funding very recently, which tells you their investors see the growth still in front of them. Read: their current valuation and market share is a fraction of what it will become.

A change of business model

You're not really doing innovation unless you change the business model. Changing the distribution channel a bit is a cost play. Many fall for the trap of thinking that's what fintech is doing, and they've missed a trick.

Robinhood pioneered the ‘subscription’ model, with customers paying a flat $10 per month to allow them to trade on margin, in addition to monetising the data of customer trades (selling order flow).

Acorns is possibly the more interesting of the two. For $1 per month, Acorns will link to your debit card and round up your transactions to the nearest dollar to save them for you. For $2 a month they'll manage a retirement savings account. Their customers appear to love the proposition and in particular how transparent this pricing is.



The average wealth platform customer is in their mid-50s. Acorns' average customer is 32 and has about $60K saved. So, Acorns are winning a customer base others struggle with and those customers are able to save as a result of how they've put their proposition together

A change of product approach

To me what really stands out about Acorns isn't the distribution channel, but the low friction of getting started. Instead of doing this big grand account opening and risk assessment and signing your life away, the goal is to just get you saving every day. Once that's done, great, we can expand from there.

They’re not alone in that concept; Plum in the UK has a very similar approach. They help you with everyday spend, low friction savings and then once you’re used to that, they’ve pre-packaged some investments to make it straightforward to build for your future. Bite-sized savings, not 30 year plans.

It’s fair to say there are a few firms in this emerging category such as Moneybox, as well as platforms like Freetrade gaining real traction and then more established firms like Revolut adding investments as part of their offering. Of course, if you want to see what these look like, we have videos of their user journeys on 11:FS Pulse.

Sustainable is the new black

So we have new business models and different approaches to acquiring and engaging a customer base. What’s next? If you know anyone in the world of investments, the big subject over the last 18 months or so has been ESG. It might sound like a food additive, but it stands for “Environmental, Social and Governance”.

The way this typically shows itself is huge companies like Blackrock and Fidelity are building funds that you can select from your investments account. These funds are then measured on things like the tons of CO2 they contribute. There’s a problem though; I need to already have a savings and investments account somewhere on a wealth platform and then I have to hunt out the fund and buy it. Not to mention that each fund is a block. Hundreds of thousands of different ones are manufactured and customers are just expected to know which one to pick from a few basic categories.

Now imagine if someone took the Acorns approach to ESG? Well, two ex-Barclays chaps did. They built Tickr and it’s super simple.

If we step back and look at the social changes happening, we have everything from the vegan sausage roll at Greggs to Nike running a marketing campaign with Colin Kaepernick. Standing for something and having purpose is how you stand out from the crowd.

The five ingredients to Wealth

So if we put this all together, I think the future of wealth has five ingredients:

Mobile first (duh) New business models (subscriptions and zero fees) A change of product approach (hacking everyday spend) ESG at the core of the offering Helping clients with cash flow longer term

We covered all of those except cash flow, because I think cash flow smoothing is the consumer killer app that hasn’t been figured out yet. Yes, there are 'lending' products out there but they don’t take the best of the other four ingredients to truly help a consumer towards their goals. Lending products are positioned as either revolving credit with high interest or big one-off loans.

Yet if you look at the popularity of services like Klarna or Affirm, to link lending to simply managing when you pay for a product, and when it can be returned (in an increasingly e-commerce world) then what you have is a sign of things to come.

But it's still 1% finished

There is simply so much to do.

What would happen if we combined these five ingredients, and tapped into the consumers' sense of purpose and meaning in the way Nike or Greggs did? What if everyday spend created everyday impact? What could we do with cash flow?

The reason we say Digital Finance is only 1% finished, is because there’s simply so much to do.