As cash back rewards become expected offerings among banks and financial platform companies, Stash is offering customers fractional shares of stocks as purchase rewards when they use the Stash debit card. The subscription-based investing, banking and financial planning platform company this week confirmed that it’s offered 5 million stock-back rewards since the program’s inception five months ago.
CEO and co-founder Brandon Krieg said Stock-Back rewards connect personal finance management, education and investing.
“We started thinking about the sense of discovery that everyday spending brings,” said Krieg. “When you go to to Chipotle, maybe you buy something there every day — you love the brand but you’re not a shareholder.”
Customers are eligible for Stock-Back rewards every time they make a purchase, and the size of the reward varies by subscription tier. If the purchase is made at a public company, customers receive a fractional share of the brand’s stock. For other purchases, customers can select default investment options as reward currency.
According to Krieg, the company doesn’t generate revenue from the Stock-Back rewards offerings. Stash makes money from subscription fees (beginner, growth and Stash+ tiers cost $1, $3 and $9 per month, respectively) along with interchange revenue.
Ron Shevlin, research director at Cornerstone Advisors, wrote in March that Stock-Back rewards could appeal to a segment of customers, but he noted that some may prefer the tangibility of traditional cash back rewards. But Stash is also moving in that direction. The company this week rolled out a 10% cash back rewards offer for purchases made on booking.com this week, and according to Krieg, other cash back partnerships with brands are on the horizon.
Founded in 2015, Stash, which began as an investment platform, has built out its ecosystem of products. The company offers retirement savings, custodial accounts and insurance products through partners. Since 2018, it’s been offering checking accounts in partnership with Green Dot Bank.
Krieg acknowledged the comparison with other digital-only challenger banks, but stressed that banking was a means to an end rather the core value proposition of Stash. He also noted that the personal finance advisory capabilities of the platform work best when information from the various financial products come together. The objectives are for customers to get personalized advice based on their behavior and to automate as many financial management tasks as possible.
“For me, banking isn’t the most important thing — the customer outcome is,” said Krieg. “One of the reasons we got into banking is that we wanted to be the financial home [for customers]. When we see the whole picture, we can give better advice. ”
Stash, which reports that it has 4 million customers, has raised $186 million in equity funding to date.
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