What do you get when you combine a pandemic, forced global quarantine and stock market volatility with a hint of boredom and curiosity? First-time investors driving fintech demand by dipping their toe into the vast ocean that is the investment and trading scene.
The leading US trading app, Robinhood, recently announced an astonishing 30% growth rate over 2020, with over 3 million new user accounts set up this year alone, bringing their total number of users to 13 million.
Closer to home, Sharesies has also reported huge growth in new accounts since Covid-19. As a result of a whopping 227% growth in 2020, Sharesies total user base is now sitting at 250 000.
With as many as 120 000 Kiwis signing up to online investing platforms since the initial lockdown, there seems to be a growing number of investors driving fintech demand. The customer-centric fintech business model is winning when it comes to new customer growth.
So what has spurred this growth? Digital platforms have essentially exploited two key areas that make traditional wealth providers unattainable for many investors: accessibility and affordability.
There’s no question that the pandemic has resulted in record growth numbers for millennial-focused fintech trading apps, with the sole aim of democratising the investment process. However, for the traditional investment sector which has typically been slow to adopt new technologies, it was a resounding wake-up call to fast-track their digital strategies.
Servicing across generations
An estimated $68trillion will be passed down from current HNWIs to their Gen X and millennial children over the next 25 years. With fewer than 50% of younger HNWIs satisfied with online and mobile platforms currently available, financial service providers need to urgently assess their digital offering to have any chance of attracting and retaining this next generation of investor.
And whilst many providers may take the approach that they don’t need to play in the digital space as it’s not relevant to their older client base, Betterment, a leading US robo-advice app, has shown that age is no barrier to the uptake of digital, with over a third of their clients being over the age of 50. Covid-19 has only accelerated this trend of digital adoption. In the US, there has been an estimated 200% increase in new mobile banking registrations in April 2020 alone, with mobile traffic increasing by 85%.
As the demand for digital-first experiences grows amongst investors across generations and wealth brackets, there’s never been a more critical time to ramp-up your transformation strategy and make the switch to fintech.
Smart automation, AI-driven functionality and intelligent workflows are key to scale up business operations to reach new segments without increasing costly overheads.
Why it’s time to make the switch
The economic impact of the pandemic and subsequent market volatility over the past few months has accelerated the adoption of technology by nearly 10 years. Confidence in online processes is driving fintech demand, and it’s unlikely that clients will switch back to their pre-Covid ways.
To stay relevant, wealth providers must respond to this rapid adoption by embracing fintech and make it a core component to their strategic planning. In a recent survey by McKinsey, 67% of respondents from organisations that reported a 25% growth rate during the pandemic indicated that they invested more than industry peers in digital-related capital expenditures.
In an online world, these companies recognise that fintech investment is crucial to driving sustainable bottom-line and market growth. With around 87% of HNWIs listing unsatisfactory service as their main reason for switching providers, using data and technology to help enhance and support the service model is no longer a future strategy, but a current priority.