Fintech Spotlight: Australian Holding Focused on Long-Term Investors
The pandemic has spurred the growth of retail investing, attracting new investors and stockbrokers.
Many of these investors have in common the desire to make money. Duration is a factor that separates them.
Those looking for quick riches – which may also have fueled a massive increase in account openings in early 2021, the so-called meme stock craze – often have small balances and generally only stay not around.
Longer-term investors, on the other hand, or those looking for ways to grow their wealth over longer time horizons, are the stickiest and best clients to work with.
That being said, as the world gets back to work, these new brokerages, some of which are publicly traded, are now struggling to grow.
Unlike many of its competitors, however, betan Australia-based brokerage firm founded in 2017, continues to grow according to the company’s senior product manager, Alexander Robertson.
“There have been a lot of new entrants to the market; there are a lot of people coming in and trading at high frequencies and with low trading balances,” says Robertson. “The type of client we’re really targeting is the higher value, longer term investors who are genuinely interested in their financial wealth.”
To learn more about how Stake is staying loyal to this higher value customer base, and what that means for the future of the business, read on.
Growth during the pandemic, Meme-Mania: With the rise of commission-free trading, there was a feverish sentiment around the democratization of financial markets.
Participants flocked to open accounts with brokers that not only made trading cheap but also fun; Advances in market structure and technology have allowed investors to interact with their finances in ways they could only dream of decades ago.
On that wave is Stake, a digital brokerage platform for investors in the UK, New Zealand, Australia and Brazil.
The fast-growing brokerage has two main offerings: Stake AUS and Stake Wall St.
“We are staking our claim in the Australian market as a major player,” said Robertson. “We are continually innovating and creating competitive differentiation.”
Currently, access to US markets is free. However, trading the Australian market costs $3 per trade. It has a lot to do with market structure and different regulatory regimes.
The broker achieved significant growth after the onset of the pandemic and throughout the stock meme show of January and February 2021.
“We had a huge explosion in account integration,” Robertson said. He noted that the influx of customers was driven by the company’s technology upgrades and premium offerings like Stake Black.
“We really seek to be the best in Australia, and we are focused on creating real product value for our customers and building a strong brand,” he added.
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Visions, aspirations for the future: According to Robertson, Australia is one of the most valuable markets in the world.
“It’s an incredibly wealthy, outward-looking population. They are looking for opportunities not just in Australia, but overseas more than most,” he said.
With that in mind, the total addressable market is much smaller than that of the United States, at between five and eight million investors. As a result, to grow, Stake is determined to take market share from the incumbents that make up Australia’s traditionally highly consolidated financial ecosystem.
“It’s an incredibly monopolized financial system. All of these banks have investment arms and … account for 65% of the Australian investment market share.” said Robertson. “We focus on that because that’s where the real value is.”
Capturing this share, the initiatives include a massive referral program that essentially rids investors of their commissions, as well as additions of trading technologies and homogenization experiences.
“It’s going to be a wild ride over the next six to eight months.” he said. “We’re going to learn an incredible amount and it’s going to ultimately make us stronger and really define what we do in the next three to five years.”
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