Is the UK’s retail audience adopting mobile first, multi-asset trading? Today marks a first in this direction
In just six week’s time, another nail will be hammered into the coffin of the desktop PC. We look at how Britain’s retail client base is just as ultra-modern as the domestic electronic trading firms
It’s the quiet ones that are often the dark horses, especially among firms that cater toward the financially conservative British retail electronic trading sector.
In Britain, very few non-domestic companies are anywhere to be seen with regard to market share, and the London-based CFD and spread betting giants dominate, knowing their customer well, garnering loyalty and ensuring a 30 year presence with a largely British customer base.
British investors may well be conservative and prudent, but they are very technologically analytical and expect to be provided with proprietary trading systems that are developed, supported and continually evolved in the way that only London’s world-leading FinTech sector can provide.
Multi-asset trading environments, offering connectivity to massive asset bases is a pre-requisite in order to engage British investors, who are usually well-read, strategic and pragmatic.
CMC Markets Plc (LON:CMCX), IG Group Holdings plc (LON:IGG) and Saxo Bank are prominent household names, their ultra-modern London nerve centers being the pinnacle of British sophistication.
Unlike their equally analytical Far Eastern counterparts, however, Britain’s traders favor a combination of mobile and desktop trading platforms, and is home to an increasingly fiscally savvy generation of young people who want to make their own independent financial future, and whom are empowered by having been born into a technological age.
This is why quiet but huge companies like Bristol-based Hargreaves Lansdown PLC (LON:HL), a $6 billion company with a purely British retail client base, evolved since its establishment as an insurance brokerage in 1982 to today’s status as the largest financial services provider in Britain, with its own proprietary system, known as Vantage, which allows investors to control their entire financial portfolio ranging from CFDs and stocks via its HL Markets white label solution from IG Group, to pensions and critical illness cover, from one central platform.
Now, a new direction is set to be taken, this time by British start up Dabbl.
Yes indeed, Britain, despite being the world interbank and institutional financial center with a history dating back to the merchant era of 300 years ago, some of the age-old institutions now standing in glass towers at Canary Wharf, their unfaltering three century history now encompassing massive global electronic trading dominance and in-house technology that powers the worlds markets, but it is also the center for financial technology startups.
The mix of start up and establishment is a healthy one in London, as the young geniuses develop the infrastructure of tomorrow whilst surrounded by global powerhouses and the talent that knows this sector as though it were second nature.
Dabbl, when it is launched in six weeks’ time, will be the UK’s first application-only stock broker, meaning that no other method of trading stock via the company will be available other than via a mobile application.
Mark Ackred, co-founder and Chief Executive of Dabbl today said “We will be rolling out the live Dabbl service on a staged basis over a period of several weeks. Our democratic approach means that those who register early will be the first to gain access to the app, with the ability to see how it works – and hopefully move on to making their first investment.”
Dabbl allows anyone to buy physical shares in hundreds of companies listed on the UK, European and US stock markets. Exchange Traded Funds (“ETFs”) will be added soon after launch. Innovative image recognition and search engine technology has been used to allow easy association between brands and the companies that own them.
If the preferences of the British investor that currently exist are any precursor to its popularity, Hargreaves Lansdown’s domestic success is a case in point.
When asked by FinanceFeeds what factors led a small, Bristol-based financial adviser on the path toward being a vast investment company, the company’s Danny Cox explained “The decline of the investment bond market, which was usually from insurance companies, and is now down to a mere 10% volume since its heyday a few decades ago, helped the quick transition to modern day style of technological service provided by Hargreaves Lansdown.”
“The founders, Peter Hargreaves and Stephen Lansdown, sought to be the biggest and the best. Their combined talents and entrepreneurial skills led to a strong and trusted service with funds now at £54.7 billion from 760,000 clients.”
Proprietary trading technology
Hargeaves Lansdown’s self-developed Vantage service, in-house operation, offers customers a wide selection of option choices such as spread betting and CFDs, ISA’s, SIPPs as well as corporate and government bonds, ETF’s, Investment Trusts. The company considers its strong customer service and safety of client funds to be top priorities.
Trading in the instruments that the company provides are manageable via the Vantage system which holds different types of investments together in one place with one valuation and dealing service, and whilst CFDs and spread betting are very much part of the firm’s product range and are offered under the HL Markets brand, Hargreaves Lansdown has 14% of the UK’s market share in ISAs.
This, then, paved the way for the understanding that catering specifically toward British dynamics is essential in the stock and ETF sector.
By the end of 2015, it had become apparent to many retail firms that spot FX only made up approximately 50% of all retail trading, hence a diversion into multi-asset product ranges ensued, led by the aforementioned British giants IG Group and CMC Markets and Danish peer Saxo Bank which has vast presence in London.
Indeed, IG Group’s 2015 acquisition of a firm which provides services outside the FX trading sector reflected the line being taken by a large number of FX companies which are expanding and diversifying their product ranges at that time.In the case of IG Group’s acquisition, the ownership of InvestYourWay was intended to assist IG Group in delivering on its partnership with BlackRock to offer a range of ETF-based investment portfolios, as per its previous announcement in July that same year.
Dabbl considers that it has devised a ground-breaking fee structure, designed to ensure that even those investing just a small amount aren’t dissuaded by high transaction fees. For a subscription of just £1.49 a month, Dabbl customers will be able to buy and sell as often as they want, without paying any commission fees, which are an average of £10 per trade with the UK’s top 5 stockbrokers.
The company considers that fifty years ago, direct share ownership in the UK was hugely popular, with ONS data showing small investors held over 50% of UK shares in the 1960s – a number that now sits around 14% – but a lack of innovation in the sector has left it as the preserve of the few, hence the need to develop specific platforms in this day of electronic trading for retail clients is important.
Dabbl’s perhaps trendy approach is tha the ability to buy shares, to participate in the profits of publicly traded companies, is a basic right which has been denied to too many of us for decades – a situation which hasn’t been helped by lethargic stockbrokers catering to an old-fashioned, wealthy elite.
Today’s Britain may still be fiscally shrewd and penny-savvy, its population having a very high standard of living and one of the world’s best economies, however it is not only a global financial leader, but also a technological one.