The GameStop short squeeze: why open banking matters in trading
How open banking gave platforms like Freetrade and Revolut the advantage
Last week, we saw a huge surge in open banking payments going through our platform, as the swept the globe and our wealthtech customers experienced four times their typical usage. In this blog, we’ll look at why open banking matters in trading — and how it gave platforms like Freetrade and Revolut the advantage.
Open banking, open tradingStock trading was once reserved for Wall Street, but thanks to the rise of free online apps like Trading 212, Freetrade and Robinhood, anyone with a smartphone can get involved. Individual investors, also known as retail investors, are now thought to make up around , up from 10% in 2019.In the same way that trading apps have opened up access to the stock market, open banking is making finance more accessible, increasing convenience for consumers and enabling businesses everywhere to build powerful financial products.Open banking gives businesses a new way to take payments from consumers — safer, faster and less manual than card payments, and much more convenient than traditional bank transfers.That’s why millions of investors in the UK and Europe now use open banking via TrueLayer to fund their investment accounts through platforms like Trading 212, Freetrade, Stake, Nutmeg, Revolut and Plum.
So why does open banking matter in trading?We’ve about the benefits of open banking for wealthtech, but there are three very specific reasons why open banking gave online trading platform the advantage last week:
- Deposits made through open banking were immediate
- New customers could be onboarded quickly and at scale
- Instant settlement reduced liquidity risk