Consumers have known for the last decade or so that using social media is habit-forming and addictive. It’s designed so audiences keep scrolling, which is especially common in a year rife with seemingly endless breaking news.
Now, financial technology brands want in on these internal mechanics and product designs to make the simple act of personal finance and saving as addictive as, say, gaming. Noah Kerner, CEO of direct-to-consumer (DTC) personal finance app Acorn, sees getting users to develop this habit as comparable to eating a plate of steamed Brussels sprouts.
Acorn hopes to turn the addictive triggers used by social platforms such as Twitter or Facebook and apply them to the fintech app.
“There are a lot of behaviors that people get addicted to that are not good for them. Wouldn’t it be wonderful to get people addicted to saving?” Kerner said.
Last week, Kerner shared a LinkedIn hiring announcement from Acorn, which noted that he was looking for someone with gaming experience who “wants to get people addicted to saving instead of games.”
“We need someone that knows how to create a habit … and can apply it to a great cause,” he told Adweek. “It could be somebody who comes from … places where they have really mastered driving engagement.”
Founded in 2012 and counting Jennifer Lopez and Ashton Kutcher as investors, Acorn finds itself in a crowded space. Within the decade, apps like Wealthfront, Betterment and Qapital have sprouted up to help make personal finance more efficient. Apps like Qapital essentially round up a user’s purchases and store them in a savings account, whereas others, such as Wealthfront and Betterment, invest your savings with a hands-off roboadvisor led by an algorithm.
Acorn does both, taking round ups and depositing and investing them in portfolios managed by a roboadvisor.
Like its competitors, Acorn saw a similar leap in growth during the pandemic, managing about $3 billion across 8.2 million users. From January to June, the brand grew 32% year over year. Previously, it had grown 55% in 2018. Similarly, Wealthfront saw new signups increase 27% year over year between Feb. 28 and March 27.
“We saw a surge in account growth when the pandemic started,” said Kerner. “We’ve seen customers really stick with it during this period and we’re happy with that because historically, in this industry, people get turned off by all the negative news.”
A key component of Acorn’s strategy has involved referrals, getting friends and family to share the app within their circles. Those are important, as the fintech industry continues to grow.
“When it comes to their money, people aren’t going to try out 25 different firms,” said Peter Wannemacher, an analyst who covers digital banking at Forrester.
Acorn has also partnered with CNBC to create financial literacy content, which is then shared on Acorn’s site and read by users. It reaches roughly 3 million unique visitors a month, according to Kerner.
Despite the offerings of a sleek design and mobile-first experience, there’s an uphill climb for fintech startups looking to displace the big banks and heavy hitters of the industry. According to Wannemacher’s research, customers still have a great deal of trust in the traditional financial institutions simply because they’ve stood the test of time.
“The idea that a firm won’t exist, will just disappear, is an actual fear [consumers] have,” he said of digital disruptors in the finance space. “That’s not a fear they have with Bank of America. … We see very little evidence that people have abandoned traditional financial providers yet.”