Jack Henry brings stock rewards to its digital banking offerings

• Key Insight: Banks can embed fractional stock rewards into core digital platforms to capture young investors.
• Expert Quote: Jack Henry's Erica Pilon says there is growing demand among young customers for small-scale stock trading.
• Supporting Data: 67% of surveyed Gen Z investors prioritize the ability to trade with small amounts.
  Source: Bullets generated by AI with editorial review.

Banking core provider Jack Henry is equipping banks and credit unions to offer stock rewards on everyday spending for their customers.
Jack Henry announced a partnership with the fractional stock rewards platform Bits of Stock on Monday, embedding the capability within the core provider's Banno Digital Platform. A company representative confirmed with American Banker that the offering will be available to all Banno users.

Consumers at banks using Jack Henry's Banno digital and mobile platforms can open free investment accounts directly through their financial institution without the need for external apps or accounts. Through either earning rewards points from using their debit card or directly purchasing fractional shares, accountholders can build a personalized stock portfolio within their main bank account.

There is demand among younger consumers for introductory investment products. Sixty-seven percent of a surveyed group of nearly 2,900 Generation Z investors (ages 18 to 25) consider the ability to start trading with small amounts a key factor in their decision to invest, according to research from the CFA Institute. 

Even though fractional stock rewards are a feature of some challenger banks like Stash and fractional share investing is more widespread among fintechs and brokerage firms, this type of reward is less common among traditional financial institutions. As banks and credit unions are looking for ways to reach young people, however, they are increasingly collaborating with stock reward fintechs to attract new members and expand relationships with their young customer base.

"There is growing demand, especially from younger consumers, for investment products that enable trading in small, incremental amounts," said Erica Pilon, head of corporate strategy at Jack Henry. "This offering helps banks and credit unions reach new investors by providing them with accessible investment tools from a financial institution they already know and trust."

Credit Union One of Oklahoma recently launched a three-tier checking account embedding Bits of Stock at varying levels from free accounts with round-ups to premium accounts offering 1% stock rewards on all purchases, according to Jack Henry.

"We were so impressed with member response during testing that we integrated stock investing capabilities into every checking account tier," said the credit union's CEO Tyrel McCain. "It creates a natural progression where members can start with free entry points and graduate to earning stock rewards as they deepen their relationship with us. It's driving both new account openings and fee income while helping our members build wealth through everyday spending."

"Entry points" refers to the access to the rewards/stocks, according to Jack Henry's director of fintech alliances Joshua Jordan. The fractional share rewards are automatically created by Bits of Stock, and customers can pre-select the fractional stocks they want as rewards.

Cardinal Credit Union also recently partnered with Bits of Stock to launch an investing rewards program geared to Cardinal checking account holders ages 18 to 28. The Cleveland-based credit union already has a built-in young consumer base through its financial literacy education programs, and hopes to retain them as long-term members through its stock rewards.