The pandemic accelerated the development, improvement, and adoption of digital services, including retail trading and investment services. This has democratised access to financial markets and fostered greater financial inclusion, leading to a surge in the number of people using their mobile devices to trade and invest.
This trend is being driven by several key factors, including:
Embedded finance: Financial products and services are increasingly more and more embedded in other apps, such as social media and shopping. This makes it easier for people to access financial services without switching to a separate app. For instance, users of social media platforms can now discuss investment opportunities and even execute trades within the platform itself, seamlessly integrating financial activities into their daily digital interactions.
Digitalisation of financial services: The number of retail brokerage accounts has increased significantly in recent years, driven by the convenience and accessibility of mobile trading apps. These apps have made it easier for people to research, invest, and manage their portfolios from anywhere in the world, eliminating the need to visit a physical bank or broker.
Lower transaction costs: Online trading platforms typically have lower transaction costs than traditional brokerage firms. This has made it more affordable and enticing for people to engage in trading activities.
Greater accessibility: The number of alternative trading solution providers has also increased, and with them, the number of mobile apps that make it easier for people to trade or invest without having to work with traditional banks or brokers. These apps often cater to a wider range of asset classes and market access, allowing individuals to diversify their portfolios and invest in more ‘exotic’ stocks from emerging or frontier markets that may have been previously inaccessible via traditional providers.
Educational resources: Many trading applications are providing educational materials to help new traders make informed decisions. This includes providing access to market data, investment research, and tutorials on various trading strategies. By empowering investors with knowledge, these resources can help reduce risk and increase the likelihood of successful investing.
Increased financial literacy: Digital trading platforms often provide educational resources and tools that can help people learn about investing. This has helped to increase financial literacy.
Social trading: Social trading platforms allow investors to share information, follow the trades of experienced investors, and learn from each other. This can help new traders to gain insights into market trends and make informed investment decisions. Social trading platforms are particularly popular among millennials and Gen Z investors, who are more accustomed to interacting and learning through social media channels.
Fractional shares trading: Fractional shares trading is making it easier for people to invest in stocks they would otherwise not be able to afford. By allowing individuals to purchase a portion of a share, rather than having to buy the entire share at once, providers of this feature make it possible for more retail investors to participate in the stock markets, and enable them to diversify their portfolios by investing in higher value stocks that would otherwise be out of reach.
Greater financial inclusion has benefits not just for the individual investor but for the wider economy: The digitalisation of trading and investment services attracts more individuals to invest in a wider range of assets, including stocks, bonds, and mutual funds, in more markets; this way, more capital is becoming accessible to businesses and entrepreneurs, which can help to stimulate economic growth.
Financial institutions can further foster financial inclusion by providing educational resources, offering fractional shares trading, and embedding financial services. By embracing these trends and continuing to innovate, financial institutions can play a pivotal role in making investments more accessible and fostering greater financial inclusion for all.
At GTN, we have made it our mission to empower financial institutions to help make trading and investing more accessible to anyone, anywhere and anytime. We work with numerous banks, brokers, fintech firms and other financial institutions worldwide to provide them with the right solution to foster financial inclusivity for their clientele.