What CFD Brokers Can Do to Stay Ahead.
Fintech has been eating the world in recent years. From challenger banks to wealth management apps, we’re seeing an ongoing process of technology democratising what was once the exclusive domain of high finance.
Many people cite the birth of Fintech as taking place in the early 2000’s with the online revolution and explosion in information technologies. Others say that Fintech really came into its own in the wake of the 2008 financial crisis, when changing regulations opened the door to disruptive new fintech startups offering banking services to a new generation of consumers over the Internet.
But when you go back far enough, you see that finance and technology have always gone hand in hand. For instance, the first bank wire transfers were made by Western Union in the early 1870s on the existing telegraph network. As you can see, the need for money and financial information to move faster and more frictionlessly has always pushed technology to evolve.
To illustrate this trend, according to Pitchbook, fintech startups received around $1.1 billion in VC funding in 2009, by 2020 this investment reached a staggering $44.1 billion. You see the same type of growth almost across the board.
Mobile payments have gone from a $550 billion industry in 2015, to a $1.4 trillion industry in 2020. According to Business of Apps, this is projected to grow to $4.6 trillion by 2025.
Across different online finance verticals you see the same type of growth. Whether it’s the growth of banking app revenues ($0.6 billion – $3.6 billion between 2015 and 2020), or the number online trading segment, which Statista recently forecasted to grow by an annual compound rate of 5.1% per year, taking the global market from $8.3 billion in 2020 to $12.16 billion in 2028.
Why is this Important?
Because the trends in fintech adoption, democratisation of banking and payment services, as well as the explosion in wealth management and trading apps touch our industry directly.
The pandemic has accelerated a move to online that was already well underway. What this move means for retail brokers is that the next generation of traders they’ve been expecting for so long has officially arrived and they had better be ready to cater for them.
In many ways, the past couple of decades have seen the rest of the world catching up to what we in the online FX/CFD space have been working towards all along. Our industry pioneered the first scalable online trading markets open to retail investors, many years before retail trading broke into the mainstream. Our message has always been about democratising trading and the use of technology to bring financial freedom to people. Over the years we have pushed the boundaries to bring a host of innovations to the market, including mobile trading well in advance of it having the kind of mass appeal it enjoys today.
Disruptors inevitably get disrupted. And if you look at the online trading landscape, you can see that the growth of rival products like wealth management apps, zero-commission stock brokers and crypto exchanges are all competing for this current generation of younger, more technologically savvy traders.
As an example, Coinbase announced it has 56 million verified users in the first quarter of 2021. Robinhood reported 22.5 million users in Q2 of 2021. Revolut has grown its own user base from 12 to 15 million in 2021. Most importantly, these different businesses are all busy expanding into each other’s territories. Coinbase started as a crypto exchange and now also offers e-banking and payments services. Robinhood started as a zero-commission stock trading app that’s now moving into crypto. Revolut started as an e-bank and now offers basic trading services in a number of asset classes, including crypto.
So, what we have is a situation where the interest in online trading is growing, as is financial literacy and the desire among ordinary people to access markets and trade their own accounts. But this is occurring at a time of increased competition, rival venues and products.
Our industry’s interface ecosystem is more fragmented because we have been around for longer and have moved through several iterations of information technology over the years. We’re also working with a number of incumbent platforms with a strong enough following that’s made it difficult, historically, for brokerages to pivot away from them.
At Panda, we believe that if our industry is to compete for clients in this environment of growing interest in trading, then we have to make our services look and feel a lot more like the Internet platforms that most of us now use on a regular basis (Amazon, Facebook, Google etc.).
This means that your users should only have to learn to use a single interface at all points in their client journey and it should look and feel consistent across devices.
Furthermore, that interface should allow them to perform all actions without ever having to navigate away to a different platform/app/URL/widget. This includes registration, document verification, funding, account management, research/learning, trading, and communication with your teams.
This approach has been the single most successful model for acquisition and retention across a variety of different online industries including the most successful and “sticky” of them all: social media. The newest entrants to the online trading segment all know this and are ensuring their own user interfaces reflect the above best practices.
We believe that Panda’s mobile/web app product to be the way forward for brokers attempting to make this transition. It allows you to keep your existing MT4/MT5 infrastructure while giving not just the trading platform a facelift, but your brokerage’s entire client acquisition funnel. Our branded mobile and web apps allow you to offer all your services through one modern, inviting, easy-to-use interface that looks great on all devices and allows your clients the freedom to access their accounts from a smartphone app or any connected web browser.
It’s also a solution that solves one of the most persistent problems that brokerage decision-makers report; the difficulty in standing out when your competitors use the same platform. Panda’s mobile/web applications add value to the investment you’ve already made in your trading servers, while making the client-facing part unique to your brand and consolidating everything your clients will ever want to do under a single UI. It’s an elegant solution to a persistent problem in our industry and we feel it can help FX/CFD brokers increase both conversion and acquisition in an evermore competitive market.
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