Previously in this series of articles I looked at the changing face of the retail investment industry and the potential for serious disruption in this space from consumer-centric, data collecting firms with massive user bases (e.g. Google, Amazon, Facebook, etc.). While this is still very much a hot topic in the financial services world, it still remains for any seriously heavyweight organisation to diversify into the investment space.
The seemingly ubiquitous Hargreaves Lansdown and IG clearly have a significant share of the market however, the door still seems wide open for organisations in other fields to move in and utilise their customer interaction. Both new and existing firms in the retail investment / spread betting / retail trading space seem to rely heavily on blanket marketing – London Underground trains covered in bright coloured, enticing adverts offering “The Chance to Take on The City”, “Trade With The Big Boys”, “Gain Access to the World’s Most Profitable Market Places” – and so on and so forth Ad Infinitum. This leads me to question why, when this presumably costly marketing wouldn’t be necessary for the likes of Amazon or Facebook to alert their customers to new offerings (e.g. Investment Management services), there have been no dramatic entrants into this field.
Along with the recent boom in hype around crypto trading came a glut of applications (mostly mobile) allowing users to become ‘the next big sensation’ in the coin trading space. Due to complexity understood by few when signing up / depositing funds it was, in many cases, somewhat harder to return profits (or indeed dwindling account balances) to actual bank accounts – clearly these convoluted transfer paths are undesirable in any future investment offering.
More popular now than in my last article in this series are ‘Central Portfolio’ or ‘Portfolio Management’ apps & websites where a user can (either manually or through auto-sync functions where possible) view their entire portfolio in one place, even when the stocks, bonds, funds, pensions, ISA’s, etc. are all held with different providers. These services provide a good level of visibility on a person’s investments however don’t actually enable trading or investing services themselves.
Sites like eToro combine trading with a more ‘social-media’ feel – discussion forums, groups, communication, portfolio transparency and newsfeeds. With this service you can tap into strategies of others, ‘follow’ traders whose profiles you like the look of, replicate their trades to your own budget and trade & invest across a wide variety of global instruments (FX, stocks, Crypto, etc.). With eToro there is a real community feel and from the site you can clearly see that they have tried to strike a balance between the very simple players (e.g. Nutmeg – no criticism meant, I have been a very satisfied user and advocate for many years) and the more complex and difficult to use.
To bring this back around, I can’t understand why Google, Amazon, Facebook (recent data ‘issues’ notwithstanding!) or even Apple aren’t leveraging their user base to essentially copy eToro and build investment profiles, offer global instant access to trading & investment instruments, generate a user community and utilise their customer base to promote new offerings (sign up incentives, referral gifts, etc.). In the current world of gamification and where finance and economics form an increasingly large part of global news output I firmly believe that consumers would flock to the right kind of offering to either start or continue their journey into the world of saving, investing and perhaps trading.
As always if you have enjoyed this content, are involved in the investment world or have any comments at all please don’t hesitate to get in touch.