Retail investment has changed the trading landscape in Europe. Investment platforms such as Freetrade, Trading212 and eToro are now household names, opening up the stock market and other asset classes to the masses. And those masses are becoming increasingly choosy about who they trust their money with. The online investing experience matters more than ever, namely how easy it is to open an account, deposit funds and withdraw returns, as our research shows.The old ways of moving money — card payments, manual bank transfers, direct debit mandates — no longer meet retail investors’ expectations for an undemanding, fast and inexpensive journey. Investment platforms that continue to rely on these methods risk disappointing their customers and failing to convert prospects. “Wealthtechs have put incumbents under pressure by appealing to retail investors,” says Henry Lee, Wealth Growth Lead at TrueLayer. “Traditional investment platforms will have a hard time doing that if they still rely on debit cards and manual bank transfers.”Conversely, the speed, ease and security of using open banking offers an opportunity for retail investment platforms — and wealth management providers more generally — to differentiate and drive customer loyalty. By removing friction from the payments experience (both ‘pay-ins’ and ‘payouts’), a retail investor gets their money where they need it, when they need it, letting the investment platform focus on its core offering. “Open banking rebalances the digital playing field,” Lee notes. “It provides an opportunity to enhance client experiences for retail and mass affluent investors alike.”An elegant, intuitive experience is even more important as a younger cohort of retail investors enters the market. For example, Hargreaves Lansdown, a large UK-based asset management firm, has seen the average age of its customers fall from 58 to 46 over the past 15 years. “The needs of the market are changing, and this demographic shift is compounded by a generational shift,” Lee adds. More tech savvy, digitally literate and device agnostic, this new breed of investor expects the same online convenience they get from everyday banking apps, ecommerce, and social media. Yet our research found that slow onboarding and deposits can frustrate investors. Open banking has the potential to turn the tides.
Wealthtechs have put incumbents under pressure by appealing to retail investors. Traditional investment platforms will have a hard time doing that if they still rely on debit cards and manual bank transfers. The needs of the market are changing, and this demographic shift is compounded by a generational shift.
