Challengers are moving into the online investing arena. Revolut has started rolling out ‘zero-commission’ stock trading, Robinhood has received approval from the FCA to expand its services to the UK, while Freetrade has the first-mover advantage in the UK and is now looking to expand to Europe.

These challengers join the multitude of other groups hovering in and around the online investing market. Many industry folks would argue that these firms don’t provide the full gamut of services that traditional investment platforms offer. But the industry has habitually struggled to bring in new investors, so these new entrants will likely find themselves competing for the same small pool of investors.

We have built a map of the digital savings/investing landscape, showing just how busy the non-advised retail investment market is becoming.

Currently, self-directed investors can choose from a wide range of investment providers and solutions including:

Currently, self-directed investors can choose from a wide range of investment providers and solutions including:

1. Traditional ‘open-architecture’ platforms offering a universe of funds, shares, ETFs and investment trusts.

2. New digital wealth managers (‘robo-advisers’) with their ‘ready-made solutions’, i.e. discretionary portfolios made up of low-cost, passive ETFs.

3. Asset managers with their lower-cost funds and ETFs for direct retail investors.

4. Banks offering either a full-fledged platform (Barclays) or just a range of multi-asset products (Nationwide).

The services provided by the new stockbrokers are like those of the older players, but what makes them different is their business model. They offer ‘commission-free’ trading in return for a monthly fee for premium accounts that give subscribers extra benefits – the Spotify business model.

Challenger banks, many of which started as ‘e-money institutions’ providing payments services, offer a newer, faster and more innovative alternative to traditional banks. By expanding into the investing space, they have the potential to morph into integrated financial one-stop shops. The incumbents still have more credibility and a large customer base which allows them to launch

new products with minimal marketing spend, but their efforts to innovate are often held back by their ancient legacy systems.

We should all be aware of the wider ecosystem and the players penetrating this lucrative market from different angles. Open banking is changing the rules of the game and consumers will be attracted to propositions that successfully integrate banking, savings and investing.

More details are available in our UK D2C: Market Update. For more information, get in touch.