Will trading become a basic banking service?

[AVIS D’EXPERT] The pandemic has caused a massive influx of new traders. But it is not necessarily the banks that benefit. Decryption with our expert Guillaume Almeras, founder of the monitoring and advice site Score Advisor.

A few months ago, Lydia, the French fintech which first became known for its payment service between people, launched a trading solution. This contributes to the expansion of its offer: a payment card, a current account, savings and credit and, now, the possibility of investing in stocks, cryptos or precious metals. This from €1, without having to download any particular application or open a securities account, for the price of an advantageous commission.

Lydia thus democratizes trading and, in France, such an offer remains quite unique (essentially challenged by other fintechs). However, other examples have appeared elsewhere, such as in the United States with Citi Self Invest. And the question is whether this approach is not destined to become widespread, with trading becoming a basic banking offer, associated with the provision of a current account. This would only ever respond to the fact that trading is becoming an increasingly common activity, especially among younger people.

Massive arrival of new investors

The turning point came with the health crisis. Particularly in the United States where, during the confinements, many new investors appeared on the stock market, often very young and many thus spending the stimulus check distributed by the Government to 70 million Americans. They were named the “Robinhoods”, from the name of the online platform, created in 2013, which was the first to democratize trading, making it as simple as possible and free.

Robinhood has thus attracted investors to the stock market without any experience, without knowledge and many of whom have quickly fallen into the hands of outspoken manipulators who claim to be market experts on social networks. The SEC, the American stock market policeman, ended up looking into the phenomenon and the press widely reported the suicide of a young speculator falsely believing himself to be in debt of a million dollars following an options trading that he misunderstood.

Despite everything, because of its success, Robinhood has, if not imposed free trading everywhere, at least forced the historical establishments in the United States to seriously lower their prices. However, this question of gratuity is not essential. In many countries, a real demand has arisen and new behaviors have appeared. In France, in 2020, 400,000 people bought shares for the first time or for the first time in many years. In total, share purchases by individuals have quadrupled.

Very quickly, a few establishments, noting this trend, endeavored to help it find more meaning: Merrill, thus, by offering to guide investment choices or Belfius through an orientation of social and environmental responsibility. But most banks remain wait-and-see, if not completely embarrassed.

Decisive influence of online games

Robinhood has been widely criticized for not doing enough financial education with the investors, often novices, who use its services. But the financial education that financial institutions generally provide – which teaches you to manage your money wisely and to be content with what you have – is precisely what more and more people, especially the youngest, do not want no longer hear!

They want to be active, diversify their sources of information, try their luck and, for some, further affirm their convictions. It looks like a game but make no mistake, it’s actually a lifestyle. The decisive influence of online games, on the other hand, is felt in the fact that complexity does not put off (cryptos benefit from it), when the experience is shared within a community.

All in all, during the health crisis, a rather strange phenomenon intervened that we largely miss seeing again: for many, finance was able to arouse a certain jubilation. It is therefore difficult to continue to formulate the old advice to act as a good father when his clients are wondering how to make a fortune in a few clicks. However, sound advice seems more necessary than ever to prevent many from being fleeced. It is still necessary for this to get into the game. To develop offers that respond to a new trend: financial advice must now include a dimension of excitement. Extensive program.

By Guillaume Almeras, founder of the monitoring and advice site Score Advisor

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