In this blog post, David Henderson adds his comments and thoughts on the results of the report and his predictions for the future.
BehindLogin recently collaborated with investingreviews.com to create a “The State of the UK Investment App Landscape” report, analysing the results of a survey of over 1,000 UK investors. This inaugural report explores the different apps across the investing landscape, the demographics and behaviours of app users in the UK and what the future of our industry looks like.
In recent years private investors have welcomed the ability to manage stocks and shares on their mobile devices via an ever increasing number of trading apps. Much like apps that we all use to pay for parking, the choice for the consumer has become increasingly overwhelming.
The Covid-19 pandemic accelerated this charge. Indeed, according to a survey from Charles Schwab, 15% of current U.S. stock market investors say they began investing in 2020. The UK saw a similar boost with companies like Freetrade, e-toro and Trading 212 disrupting the incumbents. Commission-free trading was just one of the features used by the challengers that acted like a gateway drug for new investors. All this at a time when stocks, particularly tech stocks, were soaring.
Those with lower value portfolios tended to favour the challenger apps. Perhaps a sign that in the digital age brand loyalty and trust is created with user experience and design, not a company’s quoted years of experience.
However, over the next 12 months it is likely we will see many of the challengers swallowed up by the incumbents or passed up by consumers who have seen their own returns suffer in a turbulent market. With average portfolio values of just £1-5k for many of the new entrants it is hard to see just how profitable they will be and just how many can survive.
With an increasing cost to serve low value users and funding becoming harder to secure will the big boys feel the need to catch a falling knife and take stakes in their noisy neighbours or like we have seen in banking, simply replicate many of the features that made the challengers stand out in the first place.
When companies have to tighten their belts it often accelerates innovation and pressure can create diamonds. In the next 12 months we will see which of the challengers are still sparkling.
If you want to stay ahead of the competition in this fast changing market, get in touch with BehindLogin.
