Giving investors access to all aspects of their financial lives in one digital place is the new mantra among some of the brokerage firms. After all, budgeting and investing come hand in hand, so it makes sense that customers would want a complete picture of their finances.
Ally Financial Inc. (ALLY), the fintech that operates Ally Bank and Ally Invest, recognized that when it acquired TradeKing, the online brokerage, in June 2016. The rebranded Ally Invest went live in May 2017, and that bet appears to be paying off. While Ally Bank and Ally Invest are separate units, Ally Financial has been integrating them so that banking and investment accounts can be accessed from a single dashboard.
"We are seeing a good bit of crossover of Ally Bank customers adopting our Ally Invest product," said Anad Talwar, deposits and consumer strategy executive at Ally Bank, in a recent interview with Investopedia. "It's what we thought would happen. Savings expands beyond savings account."
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According to Talwar, when it comes to saving, people tend to have a longer-term view depending on their life stage. For those nearing retirement, it could mean more of a focus on security and insurance, while for millennials, who have many years left in the workforce, it could mean riskier investments. At the same time, they want to know there is some science behind their investment advice and are thus drawn to the self-directed nature of Ally Invest.
"It's really complicated out there, and a managed portfolio product is a great way to introduce people to investing if they don't have time to study the markets," said Talwar. Ally should know. During the past year, more than 50% of its new customers have been millennials, with that number expected to increase as the fintech offers more products and services geared toward the group. Unlike older investors, millennials grew up with technology and are extremely comfortable banking and investing via digital platforms.
With millennials more tech savvy than their older counterparts, Talwar said Ally is putting a lot of focus and energy on providing customers with a "unified experience" between its banking and investing services. That means enabling customers to see both their deposits and wealth in the same spot so they can get a better sense of how they are doing. "Most other banks haven't integrated with the brokerage offering, and key competitors in the robo-advisory space don't focus on banking," said Talwar.
While pure-play robo-advisory firms may not offer banking services, Ally Financial isn't alone in its vision. Last month, Merrill Lynch announced that its clients will be able to use the mobile app to scan and send paper documents to financial advisors, access a budgeting and spending tool, and send person-to-person payments with Zelle directly from the MyMerrill mobile app. The additions are aimed at increasing the functionality on the app, which customers can already use to view account holdings, make deposits, transfer funds, pay bills and receive stock alerts.
"We've heard consistently from clients and advisors that they would like a more integrated, seamless experience across their brokerage and banking relationships," said Kabir Sethi, head of digital wealth management for Merrill Lynch, in an interview with Investopedia. Clients across all wealth levels want the ability to see their spending and budgeting all in one place, he said.