KBC 'rounds up' payments to support spare change investments
KBC Bank, a unit of Belgian banking and insurance conglomerate KBC Group N.V., launched a new spare change investing program that rounds up a customer’s daily spend and payment transactions to the next full Euro and invests the difference.
The spare change investing program is enabled through a new feature on the KBC mobile app for all KBC, KBC Brussels and CBC customers. Each outgoing transaction is rounded up to the next full Euro, which on the average transaction is about 0.38 Euros (about US$ 0.44) and then is immediately transferred to a KBC Investment plan. Once a customer reaches 10 Euros (about US$ 11.50) it gets invested in one of the company’s dynamic strategy funds.
Consumers make an average of about 40 transactions a month through their bank account. That means you could feasibly set aside 150 to 200 Euros (about US$173 to US$230) a year without even noticing it, which is a good start,” according to Karin Van Hoecke, general manager for digital transformation at KBC Bank, in a press release.
Spare change investing is not new, nor is it without controversy. Bank of America launched its Keep the Change program back in 2005 in an attempt to drive new checking and savings account openings as well as to drive more active use of its debit cards. BofA was sued over the program for patent infringement, most notably by Every Penny Counts, Inc. in February 2007.
Despite litigation, the Keep the Change program continues to be offered today and is considered a success. In the lawsuit press release it was noted that in the 16 months since Bank of America had launched the program it signed up 2.5 million customers and opened 700,000 new checking accounts and 1 million new savings accounts.
Other organizations have used spare change investing programs as effective ways of signing up consumers who have little investable capital, but a strong desire to save for their future. Acorns has used the strategy to build business that it claims to have signed up 4 million customers.
As a precaution, the KBC spare change program allows customers to pause spare change investing at any time by a simple tap of a button in the KBC app. Also, if a customer becomes overdrawn, KBC will suspend rounding up transactions until the customer returns to a positive balance.