Spare Change Investment: Saving for the Future or Selling Out Today?

Millennials are a new target market. Personal growth, independence, and self-improvement are trends especially prominent with generation Y and Z. Right in tune, finances are following suit with budget, mobile payment and now investment apps like Acorns and Moneybox. The shopping spree today allows caring for personal finances at the same time as it gives users an overview of their spending habits. At least, that is the promise.

Acorns and Moneybox – Investing 3.0
Spare change investment has become a new system that allows the user to easily link card details to an account and round up every purchase to invest the change into a portfolio previously set. Acorns, the first spare change investment app, has become a multi-million user enterprise since its launch in the US in 2012 [1]. The easy usability and convenience of the setting mechanisms are supposed to draw users without a high level of expertise into the investment market and advertise new investment strategies for everyone.

Acorns start page

Following the US version, Moneybox launched in the UK in 2015 and has steadily grown ever since [2]. The platform allows its users to link UK accounts and decide between three different risk settings to invest either in an ISA or General Investment Account. Profiles can quickly be managed and viewed over the App and offer direct one time as well as regular investments aside the linked cards just as a savings scheme would. Multimedia content simplifies the process of getting started, answering questions from investment options to why to invest at all. Although it plays into the same image of simplification as Acorns with messages like “Investment made easy with Moneybox” [3], the European version includes a risk disclosure on its front page. So, while investing in the coffee break might be a nice image, the easy attitude does not eliminate the actual risks.

Moneybox start page

The language and platform design address a new mobile-savvy generation. As millennials are behind their previous generations in terms of investments [4], the market share holds profitability if the associated precariousness and exclusiveness of investing can be overcome. Especially in the US, but also globally, the younger generations associate the stock market directly with the financial crises in 2008 [5]. Beyond the perception of risk, personal investment has been strongly related to personal funds. Acorns and Moneybox amongst other platforms try to convey a new image of investment opportunities lowering investment rates and costs, playing into a new mode of consumerism and, therefore, convenience by using spare change as a way of investment and seemingly reducing the imminent risks and need of funds.

Offline – Online – Mobile
Moving trading from the broker to the individual drastically lowered the transaction costs formerly associated with the market. Although the stock market has relied on platforms for decades, the new immediacy apps allow as well as the move towards algorithmic curation of the actual trading has changed personal investment from a two-sided into a multisided market [6]. The shift from online to mobile reflects usage preferences of the older but especially the millennial generation. Mobile internet usage surpassed desktop usage for the first time in 2016 and the mobile market is consistently growing [7]. The Big Five have given clear incentives for mobile development with Google’s mobile-first indexing as one example in 2016. Just as the shift to mobile is relying on data for better visibility and development, mobile user data is an expanding market.

The invisible costs of Spare Change Investment
Spare change investment allows a new depth of datafication of the user. The direct link to bank accounts and single payments makes it “As Easy as 1, 2, 3” [8] as the Acorns promotes while at the same time providing personal data to the company. Simplification and convenience, two concepts Moneybox and Acorns embody in their branding, are important factors in their acquisition of new users while simultaneously opening up new data streams.

Although the image of Moneybox and Acorns suggest a new transparency for investing, it does not mean transparent data acquisition or usage. Both privacy policies state the collection of personal data such as transaction data for purchases [9] or more opaque, interests [10]. While we openly wonder what Google knows about us and what data Facebook uses for personalized advertisements, banking and financial companies have always been associated with a high standard of privacy. Data, on the other hand, is a currency today [11].

Both apps are readily available on Android and IOS playing happily into the infrastructural requirements of the mobile market. The new infrastructure of investment apps might not be obvious to the normal costumer just as the options of data collections provided by downloading the apps are rendered invisible. The commonality of play stores and regular confrontation with different terms of usage let the heightened privacy issues prevalent among financial mobile applications blend in with daily mobile activity [12]. “Good, usable systems disappear almost by definition. The easier they are to use, the harder they are to see.” [13]

Each individual transaction provides new information, forming an extensive user database. While it does not seem important right away, databases can have major effects on future interactions offered or denied by the platform. Even though Moneybox might not have any restrictions right now, algorithmic changes in accordance with data can have a direct impact on users. “Databases then are expressions of power/knowledge and they enact and reproduce such relations” [14]. While the platform promotes a horizontal power structure it follows a vertical power distribution.

What are we paying for?
Are we paying for quick and easy accessibility with our data and privacy rights? Questions of privacy and data misuse are widely discussed, at the same time users allow the retrieval of highly personal information. Millennials are clearly not the only users of apps such as Acorns and Moneybox considering the investment gap between generation Z and the silent generation [15] but they are going to be the largest generation of adults by 2019 [16]. They will have a strong influence on decision-making processes as well as market developments including questions of data usage and privacy.

Although the simplification of access, not only to the apps but to the investment market by Acorns and Moneybox, as well as the curation of financial knowledge especially for beginners are positive points, the data usage and privacy issues are prevalent. While creating a seemingly transparent environment, the platform ecosystem is extremely opaque on an economic, political as well as infrastructural level. Analysing the opportunities of mobile markets, all perspectives should be taken into account since “[s]omewhere deep under the layers of algorithmic machines there can be hidden new forms of potential human rights violation, new forms of exploitation and mechanisms of manipulation on a large scale influencing billions of people each day.” [17]

Sources

[1] Shieber, Jonathan. “Acorns Hits 3.5 Million Users, Sees 100,000 Sign-Ups for Retirement Product in Its First Month.” TechCrunch, TechCrunch, 29 May 2018, techcrunch.com/2018/05/29/acorns-hits-3-5-million-users-sees-100000-sign-ups-for-savings-product-in-its-first-month/.

[2] “Moneybox.” Crunchbase, www.crunchbase.com/organization/moneybox-2#section-locked-charts.

[3] Digital Moneybox Limited. “What Am I Investing in?” YouTube, 30 Aug. 2016, youtu.be/049u_M_mOWc.

[4] Tepper, Taylor. “Millennials Prefer Cash Over Stocks, And It Could Cost Them Millions.” Bankrate, Bankrate.com, 26 July 2018, www.bankrate.com/investing/financial-security-july-2018/.

[5] Kobler, Daniel, et al. “Millennials and Wealth Management – Inside Article.” Deloitte.com.

[6] Nieborg, David B., and Thomas Poell. “The Platformization of Cultural Production: Theorizing the Contingent Cultural Commodity.” New Media & Society, 2018, doi:10.1177/1461444818769694, p. 3.

[7] Etherington, Darrell. “Mobile Internet Use Passes Desktop for the First Time, Study Finds.” TechCrunch, TechCrunch, 1 Nov. 2016, techcrunch.com/2016/11/01/mobile-internet-use-passes-desktop-for-the-first-time-study-finds/.

[8] Acorns Grow Incorporation. “Invite.” Acorns, www.acorns.com/invest/.

[9] Digital Moneybox Limited. “Moneybox.” Moneybox – The New Way to Save and Invest – The Simple Way to Save and Invest, www.moneyboxapp.com/privacy/.

[10] Acorns Grow Incorporated. “Invite.” Acorns, www.acorns.com/privacy/.

[11] Kitchin, Rob. The Data Revolution: Big Data, Open Data, Data Infrastructures & Their Consequences. SAGE Publications Ltd, 2014, p. 16.

[12] Share Foundation 2017. “Invisible Infrastructures: Mobile Permissions.” SHARE LAB, 6 Nov. 2015, labs.rs/en/invisible-infrastructures-mobile-permissions/.

[13] Bowker, Geoffrey C., and Susan Leigh. Star (2008). Sorting Things out: Classification and Its Consequences. in Gitelman, Lisa. Raw Data Is an Oxymoron. Cambridge: MIT Press, 2013, p. 9.

[14] Kitchin, Rob. The Data Revolution: Big Data, Open Data, Data Infrastructures & Their Consequences. SAGE Publications Ltd, 2014, p. 22.

[15] Martin, Emmie. “Only 23% of Millennials Prefer Investing to Cash-Here’s Why They’re Skeptical of the Stock Market.” CNBC, CNBC, 1 Aug. 2018, www.cnbc.com/2018/08/01/why-millennials-are-scared-of-the-stock-market.html.

[16] Kobler, Daniel, et al. “Millennials and Wealth Management – Inside Article.” Deloitte.com.

[17] Share Foundation 2017. “Immaterial Labour and Data Harvesting.” SHARE LAB, 30 Aug. 2016, labs.rs/en/facebook-algorithmic-factory-immaterial-labour-and-data-harvesting/.