Forbes Dec 23, 2016
In online banking, Nordic banks may have a head start on their U.S. counterparts. At banking group Swedbank, for example, customers made the switch to internet-based banking services in the late 1990s. So when entrepreneur Alexander Wallin looked for the first region in which to partner his social investing app, SprinkleBit, with a big bank, the Swedish native turned to home.
The result is a collaboration that should bring a new type of mobile investing to Swedbank customers in 2017 and the chance for SprinkleBit to hit its stride in customer growth. As part of the partnership, Swedbank will share SprinkleBit with its 7.2 million private customers—a massive boost from the 18,000 or so users on the platform today. While anyone will be able to use the app, Swedbank will process all real-money trades made through SprinkleBit for the Nordic region; Swedbank customers will also be able to see their real-money stock portfolio within the app.
“We are bringing together a network effect,” says Wallin, who launched SprinkleBit in 2012 out of research he did as an undergraduate at the University of California, San Diego. SprinkleBit raised $10 million in funding in January 2016 and moved to New York City, but spent the year focusing more on its product and pleasing a small customer group before focusing on growth. Wallin still grew his user base by about 80% without any marketing, but paid more attention to how active his users were within the app: 20% of SprinkleBit users log in more than 5x each week. For the full year 2015, median returns for users were 35%.
With the Swedbank deal, SprinkleBit now hopes that 2017 will be a year of hyper-growth. Wallin reached out in February to the bank, where he quickly stood out from a host of fintech startups the bank’s digital group meets on a regular basis. “It’s a new way to communicate when a lot of people can see trading as a little difficult and scary,” says Emma Heimonen, Swedbank’s head of digital innovation. “SprinkleBit has a great educational and fun platform that really lowers the barriers to start trading.”
The bank liked that SprinkleBit has its own virtual currency that can be traded as users educate themselves on the market; the community side of the app, which encourages discussion between users about stocks and strategies, could also help more experienced members onboard newer peers. “Customers can analyze the market already from a fundamental perspective,” says Magnus Akerling, head of electronic sales and distribution. “The social phenomenon was the next step.”
SprinkleBit spent months in the U.S. obtaining its own licenses to act as a broker for real money trades. In other regions, it plans to follow this Swedbank model, selecting one regional partner to handle the back-end. So far a closed group of employees at Swedbank have been testing the app, Heimonen says. (“It’s funny because some of our communication has been taking place through SprinkleBit,” Wallin adds.)
Wallin says that if 10% of Swedbank users become active SprinkleBit members in the next two years, those hundreds of thousands of customers will make the partnership a big success. “But me being the naive entrepreneur that I am, I think we can reach even higher,” he says. “We see it as something for people interested in learning and improving their decision-making,” Wallin adds.
If SprinkleBit can get to 30% of Swedbank customers converting to weekly users? That’d be more than 2 million user–and a vastly different profile for the startup.
At Sprinkle we simplify capital markets through innovative technologies and connect people from all over the world to the capital markets.
Our social investing network, SprinkleBit, lowers the barriers of entry by allowing retail investors to get started through a simulator, education, and a social network to copy their friends’ trades. Our next generation stock exchange, SprinkleXchange, is based on blockchain technology. It holds the same institutional quality for order matching and throughput but cuts out the middlemen in post-trade clearing and settlement. By leveraging blockchain technology, brokerage firms from all over the world can trade, clear and settle, 24 hours a day, seven days of the week. In addition to this we provide trading platforms for broker-dealers to reach the next generation of retail investors.