Building investment and retirement goals in Digit
At Digit we’re on a mission to make financial health effortless for everyone. It’s a huge goal, but like any challenging and impactful problem, it’s achievable by breaking it down and solving it in pieces. One major piece of the financial health puzzle is long-term wealth.
How investing fits in with Digit
It’s been an exciting time for us here lately. We recently launched Direct — an intelligent bank account that budgets and saves for you. And now Digit can save for investing and retirement goals too.
Digit gives you time back. It’s one of the things that makes the app so important in our members’ lives. We take the mental math out of saving toward different goals. Digit analyzes your income and spending patterns, then allocates money toward your financial goals. For big goals, like saving toward a down payment on a house or retirement (the ultimate long-term goal!), Digit now offers investing and retirement accounts so members can put their money to work through investments.
Our goal is to make the investing experience automated and simple. These are the principles we followed while developing these features:
- No account minimums
- Make it easy to understand
- Invest in liquid, diversified, low-cost ETFs
- Investing and retirement features are included as part of a Digit subscription
- Aligned with product vision
For long-term investments, a portfolio is recommended based on the member’s risk level. Retirement account investments are recommended based on glidepath/proximity to retirement age.
- We recommend a portfolio for you (which you can adjust)
- You can set an optional investing goal target amount
- Digit saves automatically towards your investing goal.
It literally takes a couple minutes to sign up and be ready to get started.
A closer look at our architecture
Both investing and retirement goals are powered by our broker-dealer partner DriveWealth. We integrate with them to process all transfers in and out of those accounts and to provide tax information and statements to send to members. For every Digit member that creates an investment goal or a retirement goal, we create a DriveWealth brokerage account.
Let’s take a peek into the architecture that powers our interactions with DriveWealth.
Money movement happens either through automatic transfers from our daily savings algorithm or because the member requested a transfer through the app. The application service then creates a transfer and queues a process in our Job Queue system to submit that transfer to DriveWealth.
Instead of writing those transfers to a file as we do for other ACH transfers, we grab the bank account and routing number from a secure location and send that along in an API request to DriveWealth who then initiates an ACH pull from the user’s linked funding account.
A difference to note is when a member tries to withdraw most of their funds and how transfers are timed. Normal ACH transfers take roughly 2 business days to settle, but DriveWealth transfers can take upwards of 5 business days. This is because DriveWealth has to convert the member’s assets to cash before they can be withdrawn.
Another difference is when a member tries to withdraw most or all of their funds. If a member tries to withdraw more than 95% of their funds, we’ll pass along a liquidate flag in the request to DriveWealth. We do this because in the past when we tried to withdraw the value of a member’s portfolio, that transfer would be pending, the market would fluctuate, and then when the transfer was settling it would fail because the user no longer had enough funds to fulfill the original withdrawal amount due to market fluctuations. We picked 95% as the threshold because it’s unlikely for the market to fluctuate by more than 5% before transfers post.
What else did we build?
As you might have guessed, investing requires adherence to strict compliance and controls. We architected a system that would ingest events from DriveWealth (orders, money flow, transactions, etc.) and built monitoring on top of that (ACH transfer delays, incorrect cash transfers, etc.). We monitor whether or not transfers are created successfully and whether or not transfers post successfully, among other important metrics.
We’re excited to launch investing and retirement features powered by DriveWealth in Digit — it’s a big step towards making financial health effortless. We have an exciting set of additional features on our roadmap that the team is thrilled to build.
This blog was made possible by contributions from Yubo Diwu— who is an Engineer in the Savings team in product engineering.
Note: Direct℠ is a deposit account powered by MetaBank®, N.A., Member FDIC.