The swift uptake in digital platforms that we’ve witnessed over the past year begs the question: Is digital investing seen as a gimmick by investors or is it the new normal? Off the back of the highly insightful Money and You series by the Financial Services Council comes a thought-provoking and timely insight into the current landscape of digital investing.
Our CEO, Rachel Strevens, was recently invited to take part in the panel discussion at the launch of this report, titled “The Rise of the Digital Investor”, which provides extensive insight into Kiwi’s views on micro-investing and technology. Other panellists include Hugh Stevens (CEO of SmartShares), Ryan Bessemer (CEO of Trustees Executors Ltd), Gus Watson (Head of Investments at Sharesies) and Clarissa Hirst (Content Manager at FSC).
Financial literacy is a big driver for digital platform adoption
According to the report, over 35% of current digital platform investors choose micro-investing platforms to improve their financial knowledge and capabilities. This indicates that current digital platforms are putting in the work to help educate investors.
In the panel discussion, Rachel highlights that this figure indicates a very real willingness from investors to be more involved and knowledgeable around their investments. For incumbent providers who are currently building out their own digital platforms and portals, it’s important to dig into what type of information and content their customers may be looking for. Intuitive prompts and financial calculators are easy add-ons when building your digital interface for investors, and providers would be wise to leverage the engagement benefits that these tools can bring.
To quote Hugh Stevens, digital platforms have facilitated “learning by doing”, creating a brilliant way for investors to directly engage with their investments and improving their knowledge as they navigate these platforms themselves. However, as these digital platforms are largely unregulated still, with many not offering traditional advice in a sense, more can be done to make sure “that there are appropriate warnings and mechanisms in place” to enable better financial outcomes for Kiwi’s, as quoted from Ryan Bessemer.
Growth in technology adoption – the intention is there
Perhaps the most fascinating bit of information garnered from the report is the difference between those that currently use platforms or technology and those that plan to use it. For micro-investing platforms, 16.7% of respondents indicated that they have used or use them, while 21.5% stated that they plan to. For digital currencies, 13.3% have used or currently use them, while 17.6% plan to use them. For robo-advice, 8.4% of respondents have used or currently use them while 18.8% plan to use them. That’s more than a 28% growth predicted right here in these emerging technologies!
From a strategic point of view, this information is valuable to providers, as this type of data can help you to plot your digital roadmaps and identity priorities or “key lighthouse projects” (for more information on digital roadmaps, read our article here). With a growing inclination to utilise these technologies, it’s clear that incumbents need to jump on the digital bandwagon or face irrelevancy in the very near future. To quote Ryan Bessemer, an “inability to change and legacy systems will be a big burden, and tip the balance of power for incumbents.”
Building trust in an era where cybercrime is rampant
Cybercrime has been dominating headlines over the past couple of years, with some of New Zealand’s most notable brands falling prey to ransomware and data breaches. This is not going unnoticed by investors: up to 80% of respondents indicated that they are concerned about privacy and security when using digital platforms.
As the world of cybercrime evolves, Rachel Strevens highlights the importance of having a thorough cybercrime strategy in place to mitigate these risks for customers. She stresses that security should not be a “once-off set and forget” type of approach, but rather continual monitoring is needed to benchmark your security processes against evolving threats.
She discusses how a two-pronged approach works best, whereby both the provider and end-user take responsibility for managing the safety of their data. Frequent password changes, two-factor authentication and biometrics are effective tools, when combined, to help reduce risk as much as possible.
To quote Rob Flanagan (Independent Chair of the FSC), the title “The Rise of the Digital Investor” certainly sounds “like a movie… or a rebellion.” The digital revolution we are currently witnessing is here to stay, and customers have more power than ever to rewrite the rules of engagement when it comes to their investments. Providers who capitalise on the ease of use and educational benefits that technology brings could potentially trump first entrants and direct-to-consumer platforms. By their very nature, the digital platform space will continue to evolve at a rapid pace, utilising cloud computing and other emerging technologies to expertly service investors as they demand.
View the full panel discussion here (scroll through to 26:35 for the start of the panel discussion): https://www.youtube.com/watch?v=KMeAW6hNUKk.