Automated Savings Startup Digit Opens Up To All

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Digit, the startup that automatically saves cash for users, has been operating in a kind of invite-only beta over the last nine months or so. Thanks to a banking partnership with Wells Fargo, the service is now ready to open up to the public and allow anyone to sign up.

A couple of months ago I wrote about the service at length, but it basically comes down to this: You connect Digit to your checking account and every couple of days it funnels a small bit of cash out of your account. Over time that small amount of cash starts to add up, and eventually you end up with a large wad of cash saved up.

The service is meant to make saving seamless and painless, to help people set extra money aside they never knew they had. By analyzing your income and regular spending habits, Digit estimates how much it can safely take out of your account and places it into a non-interest-bearing savings account.

While you set Digit up on the web, the service is meant to be as invisible to the user as possible. Its website has a pretty basic dashboard with your current savings balance and the total amount saved, as well as a list of recent withdrawals from your checking account.

But all communication with users happens via SMS. Digit sends a text to users every day, giving them updates on their current checking balance, or how much they’ve saved, or recent major changes in their checking balance. Users can pause the service or withdraw the money out at any time using a series of SMS commands, and Digit even has a way to let people accelerate or decelerate the level of savings that it takes out.

I’ve been using Digit since August. Since then, it’s saved me about $1,400, putting aside an average of $15 every 1.6 days.

According to CEO Ethan Bloch, my level of savings isn’t unusual. Digit users save about $200 per month on average — and in most cases, that’s $200 that they wouldn’t have put into savings themselves.

Of course, Digit isn’t for everyone. If you work in a startup and are making six figures, you probably have your 401(k) maxed out and an IRA and some sort of automated savings plan. Maybe you have someone else do your taxes. Managing your finances is easy!

But if you’re like the majority of people in America, you probably don’t have any savings. In fact, you probably have a negative savings rate. For those users, having a small amount of money deducted and set aside can help out a lot.

As a result, it’s been connecting with users, who have been connecting it with their checking accounts. In invite-only beta, Digit has been growing about 45 percent week-over-week, mostly through word-of-mouth. It’s saving about $1 million a month for users, and now anyone can sign up.

For Digit, savings is just the first financial service it could offer. Right now, Digit makes money off the interest from cash it’s saving on behalf of users. But over time, it hopes to provide more powerful financial tools for users.

For instance, it could provide an automated system for transferring Digit savings back into someone’s checking account if it recognizes that the user might have an overdraft, which could save a lot of money in fees. It could also eventually connect with users’ credit cards or other loan accounts to help automate payments and reduce their debt.

It’s a big vision, and one that could help a ton of people. But getting them to put some savings aside is just the first step.