In an effort to reach and retain younger consumers, a Cleveland credit union is offering new investors the option to build a starter portfolio of name-brand stocks through their everyday purchases.
Cardinal Credit Union recently partnered with fractional stock rewards fintech Bits of Stock to launch an investing rewards program geared to Cardinal checking account holders aged 18 to 28.
The new program, offered through Cardinal's digital banking platform powered by
There is demand among younger consumers for introductory investment products. Sixty-seven percent of Generation Z members (ages 13 to 28) consider the ability to start trading with small amounts a key factor in their decision to invest, according to
Credit unions are also looking for
At Cardinal, members between the ages of 18 and 28 can enroll in the program and automatically earn stock rewards on Cardinal Visa debit card purchases. The rewards are then redeemed into fractional shares of certain publicly traded stocks of the user's choosing. Through a brokerage account-like dashboard in Cardinal's app, users can also make stock trades to build their portfolio.
"They do not have to worry about the risk of [investing] their own money, which is a great learning experience," Cardinal Credit Union CEO Christine Blake told American Banker.
The ten stock options that the credit union offers to young investors through its stock rewards program are Disney, Apple, Amazon, Google, Meta, Tesla, Walmart, Starbucks, Nvidia and Microsoft.
Bits of Stock is the holding company for the stocks, and Cardinal customers purchase fractional shares from the fintech directly through Cardinal's online banking interface.
"We have a relatively new API infrastructure and trading technology that facilitates the fractionalization and trading," Bits of Stock CEO Arash Asady told American Banker. "Everything is within one technology layer: where the stocks are held, the cash, the securities, the buying and the selling, the fractionalization, that's all happening in our technology stack."
Cardinal Credit Union has built up its younger customer base through financial literacy education programs in high schools throughout the Cleveland metro area since 2012. According to a company representative, about 15% of the credit union's current customer base is 18-28 years of age.
The stock rewards program is starting with young investors as a testing ground before the feature is rolled out to all members, Blake said. "18 is the senior year that our groups are in high school. We teach in five high schools, so we're introducing to them a product that we can onboard them with during their last year of school." Eighteen is also the federal legal age requirement to independently open an investment account.
The upper age limit of 28 was selected to "focus on concentration marketing," according to Blake.
"Many of those same students that started with us in high school have stayed with us throughout college and after," she said. "We know that we have an audience in that age group, so we extended it to 28 because we wanted to bring in those who know Cardinal already alongside potential new members. Once we capture that market, then we can look at how we can best use our resources to roll it out to the rest of our membership."
