Most acorns are benign. They drop from the tree, take root in the ground and begin sprouting another tree. In the credit union world, there are Accorns to watch out for. Here is what you need to know to be "in the know."
What is Acorns
Acorns is a financial technology company that offers a mobile app that rounds up users' purchases to the nearest dollar and invests the spare change in a portfolio of ETFs. Acorns has been growing rapidly, with over 9 million users and $4.7 billion in assets under management. While some credit unions may view Acorns as a non-threatening competitor, there are several reasons why they should be worried.
Acorns Offers a Convenient and Low-Cost Investment Option
Acorns' app is user-friendly and offers a low-cost investment option for millennials and other tech-savvy consumers. The app's ease of use and low fees make it an attractive option for consumers who may not have the financial resources or knowledge to invest in traditional financial products. Credit unions that don't offer a comparable investment option may lose out on these potential members.
Acorns Is Expanding Its Offerings
Acorns started as a micro-investing app, but the company has been expanding its offerings. In 2018, the company launched Acorns Later, a retirement savings product; in 2020, it launched Acorns Early, an investment account for children. Acorns is also planning to launch a debit card that offers cashback rewards automatically invested in a user's account.
Credit unions that don't offer comparable products and services may be disadvantaged and risk losing market share to Acorns.
Acorns Has a Strong Brand and Marketing Strategy
Acorns has a strong brand and marketing strategy that appeals to millennials and other tech-savvy consumers. The company has partnered with high-profile brands like PayPal and CNBC to increase its visibility and reach. Acorns also use social media and other digital marketing channels to reach its target audience. Credit unions that don't have a strong brand or marketing strategy may struggle to attract and retain members, particularly younger consumers.
Acorns Offers a Mobile-First Experience
Acorns' mobile app is designed for a mobile-first experience, making it easy for users to manage their investments on the go. This particularly appeals to millennials and other tech-savvy consumers who prefer using their mobile devices for banking and financial management. Credit unions that don't offer a comparable mobile experience may struggle to attract and retain younger consumers.
Credit unions should be worried about Acorns. The company's low-cost investment options, expanding product offerings, strong brand and marketing strategy, and mobile-first experience make it an attractive option for millennials and other tech-savvy consumers. Credit unions that don't adapt to these trends risk losing market share and struggling to attract and retain members.
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