Social trading is dead. Or is it? It depends how you look at it. Where others have long since gone, one particular company is taking a very unique view, right here in London – We take a look
The retail FX sector lives and operates very much in a post-social trading environment these days.
As advantageous as FinanceFeeds’ roots are within some of London’s largest institutional and interbank giants dating back 26 years to almost this day, the retail sector of the OTC derivatives industry is the epicenter of innovation, whether it be buzzword-initiating fads or genuine revolution.
One such buzzword which proliferated the financial sector’s retail electronic trading world just five years ago was social trading. In an internet environment where the young and social media-orientated Millennials were incorrectly viewed as a potential future client base for FX companies, digital marketing moguls embraced social trading as a method of engaging the young trendy generation with a young, trendy means of following other traders, and henceforth hoped for greater lifetime value and a future-proof trading environment in which self-empowerment is instrumental.to
Five years on, the reality is somewhat different. More or less every social trading platform that existed in 2012 is now either a distant fragment in the history books, or has faded into the background.
All, except one, that being eToro.
eToro’s origins date back just a decade, hailing the heydey of Israel’s digital marketing and conversion funnel prowess. eToro was not the brainchild of a hedge fund manager, nor was it a byproduct of any financial services industry innovation that spawned a new direction.
Quite the contrary. eToro was established by social media and digital marketing experts, to become a social investment platform, in which the social network technology took precedence over the trading environment.
The result is that whilst Currensee and OANDA’s fxUnity have long since been pushing up daisies, and whilst Tradimo, myfxbook and ZuluTrade are a shadow of their former selves, and Tradency’s Japanese business is the company’s mainstay, eToro is pushing the boundaries across several continents.
Indeed, it was Sberbank and Chinese financial institution’s private equity arm PingAn Ventures that invested in eToro to take it from its relatively humble Israeli origins to become a global tour de force and an integral part of Ping An Bank’s centralized multi product online investment platform that serves retail banking customers across mainland China, however eToro has its sights set on London this summer.
Before any armchair pundit reaches makes the point that eToro has been in the UK for quite some time and has long since had an FCA license, under the steerage of Iqbal Gandham, the company’s UK CEO, whose high profile credentials have been documented in Forbes during his tenure at Nutmeg, that is clear and of course well understood.
What is new is the company’s approach toward its next direction, with London’s City and West End professionals across all sectors in mind.
Social trading may well have been the buzzword at the beginning of this decade, however that has given way to the prefix “crypto” which now adorns so much of the webspace, usually having been penned by people with an unusual looking beard and a penchant for facial decoration that would consume the resources of even the weakest metal detector.
However, eToro has embarked on a product range and marketing campaign that place the ultra-modern and unknown with the old school method of billboard advertising.
Perhaps, being an extremely marketing-savvy company, the think tanks of Ramat Gan, Shanghai and London know something we don’t.
On the Circle Line, which is the London Underground route which literally makes a circle (rectangle on the tube map) around Central London, mostly including the West End and the City, eToro is prominently advertising its new Crypto CopyFund via analog bill posters, to a retail audience of high levels of intellect, that being the 25 to 50 year olds in London.
The Crypto CopyFund is a single portfolio including Etherium, Ripple, DASH, litecoin, and Bitcoin, and displays a message highlighting transparency, saying “Crypto needn’t be cryptic.”
It is, of course cryptic and has absolutely no backing, and as FinanceFeeds has documented over its years in existence, very little likelihood of ever being recognized as a genuine asset class in the financial markets industry.
It is clear that those with an institutional technology background (such as me -Ed) will disseminate the future of Bitcoin, in that the blockchain database is valuable to institutions wishing to automate their distributed ledger operations, and when they find a way, after tens of billions of dollars of investment in R&D, to separate the construction and operation of blockchain database technology from the actual Bitcoin itself, Bitcoin will be null and void in every sense.
However, eToro does not look at anything through the eyes of a hackneyed institutional technology developer. Instead, it views the entire social network and everything-on-one-platform aspect as a marketing and retail customer taking a punt and enjoying it type of environment.
On this basis, it may work among initiated Londoners.
London is, after all, the capital of self-empowerment. Not only is it the world’s most important financial and FinTech center across all sectors, but it is also ultra-modern and is home to hundreds of thousands of highly educated young hopefuls who are forging their own way forward via the very latest developments in modern global business.
When viewed like that, a platform that harnesses all crypto currencies, not just one, and allows retail customers to have a shot at a portfolio which is backed and hosted by eToro, which itself is now a massive company, it is easier to see where crypto currency fits in.
Rashness leads to loss and disappointment, hence many direct investors in Bitcoin via single Bitcoin exchanges have seen their funds and the venue that holds them evaporate faster than the contents of a WD40 can in the Arizona desert, denoted by a litany of disasters, e-wallet hacks, exchange collapses and mavericks and anarchists championing their attick-room inspired causes to bring down the banks before running for the hills with customer funds with no recourse.
In this case, however, a dedicated platform operated by a large FCA regulated electronic trading firm which has one of the most sophisticated social networking and customer data aggregation platforms in existence, and is part owned by a giant Chinese bank whose customers are fully active in its product, may well have legs…. or tracks in this case.
eToro is no stranger to taking specific niches and going its own way with them. In Shanghai recently, FinanceFeeds met Jasper Lee, the company’s CEO for the APAC region, who explained the diversification route and the new distribution channels for very unusual products that was on the agenda.
“Due to the investment by PingAn, we are now able to utilize our mutual relationship to advantage” said Mr. Lee. “There are several different subsidiaries under the PingAn group, which include PingAn Security and LUFAX. Our synergy with these divisions was sealed in December 2016 with a memorandum of understanding having been signed” said Mr. Lee.
“With different subsidiaries we did differnt things. With PingAn Securities, we conducted some seminars. The purpose of these were to educate people in China who invest in Chinese stock, to invest in global stock, whilst abroad, we offer Chinese listed companies to Chinese traders in the US, such as Alibaba, JD, which Chinese people are familiar with so they can trade with confidence” he explained.
eToro gains access to single plaform for multi-product financial services via PingAn TOA
Mr. Lee then showcased to FinanceFeeds how eToro was able to launch an education website where the firm can provide educational resources to clients about oversees investments. PingAn’s TOA system, which provides a single log in for users, meaning users can log in to eToro platform so they can access all of the services provided by PingAn Group with just one log in.
“We have also signed a memorandum of understanding with LUFAX, and we aim in 2017 to operate together to provide services to Chinese customers who live oversees.” – Jasper Lee, CEO APAC, eToro
LUFAX has been one of the largest global FinTech firms over recent years, and the company hase a huge base of Chinese users who live outside China, and it is widely accepted that among the diaspora community there are numerous people seeking oversees investment very eagerly.
Perhaps now this diversification is here in London, and no Train-ing will be needed…. Yes, very good, I know….