Ivan Gowan, CEO at fintech company Capital.com, explores how startups are disrupting the trading and investment community, and central role that education must play in this process.
One of the biggest impacts that technology has had is on the financial sector. This change has been driven in part by young and agile fintech companies who have disrupted the financial sector with new, innovative methods of providing financial services.
According to research by PwC, more than 88% of financial institutions believe that their business is at risk due to revenue lost to fintech innovators. In addition, 82% of the institutions surveyed expect to increase partnerships with fintech companies in the next five years, showing recognition from the financial sector that they have to ally themselves with the fintechs to survive in this digitally-disrupted marketplace. The influence of fintech companies on the sector is going to grow exponentially and fundamentally change how financial services are provided.
One interesting area within the financial sector that fintech startups have disrupted is trading. Perhaps, twenty years ago, if you wanted to start investing, you had to get yourself a full-service broker who would then offer advice and invest your money for you. This would of course cost a lot of money and was only available to those with a high level of capital. In theory this meant that, unless you had a business degree, a wealth of knowledge or plenty of financial resources, it was almost impossible to start trading.
However, a sector which has traditionally had a high barrier to entry for consumers is now part of the fintech revolution, with a new wave of consumer-focused trading and investment apps spreading throughout the financial sector. The most innovative among these are leveraging data and using advanced machine learning to give their users targeted, bespoke and personalised information to help their trading.
While the democratisation of the financial sector means that more people can access trading platforms and services through intuitive mobile apps from the comfort of their living room or while they’re on the train, it also means that consumers need to be better educated about the risks of investing to gain a better understanding of the financial sector. Trading platforms have a responsibility to help investors manage their appetite for risk against but also better understand their ability to handle any losses and obstacles they might face. Similarly, there is also a demand for more education from consumers, who want to learn, study and participate in the markets. Financial literacy is extremely important for everyone today, whether they want to become a trader or not, and fintech companies should consider it a priority when developing new platforms and services.
Capital.com is one such example of a fintech company aiming to make trading more accessible and achievable with its new educational app Investmate. The app – which is free to download – delivers an expansive range of introductory trading courses on financial instruments, derivatives and CFDs, as well as a course on understanding the risks of trading. Uniquely, it uses a gamification approach to education with interactive courses, quizzes, and fun articles, aimed at teaching amateur traders about investment best-practices.
The app suggests goals based on users’ trading experience and in addition, any financial terms that are referred to in the lessons are highlighted, giving users the opportunity to click through to a more detailed description of that term. Through this material, Capital.com will help beginners become more responsible, informed participants in the market, as well as provide them with the tools they need to trade successfully.
So, even if consumers don’t understand how the stock market works, or how to play and invest their money wisely, Investmate aims to make investing fun, simple and easy to understand. The app is continually updated with new educational materials and future plans include the addition video tutorials and a breakdown of basic financial terms.
We believe that investing should be a fun and rewarding experience for consumers, with the potential to make significant gains. But for this to be the case, they must be educated to the risks they face, how best to mitigate these risks, and the basics of the financial markets, so they can make informed, educated assessments of the best assets for them to invest in. Through our Investmate app, we hope to educate one million users on the basics of finance by the end of 2018.
Apps like Investmate can offer fun, engaging ways to learn more about the financial markets and, crucially, open up areas of the financial markets that were previously closed off to consumers with high levels of capital and technical know-how.
Capital.com is an insurgent fintech on a mission to make the world of finance more engaging, accessible and useful. With an award-winning financial trading platform, available on web and app, it uses patent-pending technologies to revolutionise the trading world.
The platform’s SmartFeed works to detect clients’ trading biases and recommends personalised content to help them trade smarter.
With the ultimate goal of improving clients’ trading performance through education, Capital.com delivers financial lessons, videos, quizzes and more through its Investmate app.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.