Digital platforms and digital assets are making investing more enticing and affordable for a new breed of investors. Think millennials (people born between 1981 and 1996), senior-year university students, and professionals in their 20s and 30s who have never tried their hand at investing because they didn’t have enough capital or couldn’t understand how to even begin.
The availability of fintech tools, though, has helped demystify investments and lower the barrier to entry for these new investors.
So it’s no surprise that as fintech boomed, the finance app industry also saw an increase in adoption—from 16% in 2015 to 64% in 2019. In almost the same period—from 2015 to 2020—Google searches for the term “investment app” have more than tripled.
Meanwhile, as Covid-19 wreaked havoc on economies and cast a shadow on the near future, young people began using investment apps to try investing for the first time in their lives.
As a result of such apps’ popularity and potential, fintechs that make investment accessible are gaining more attention from venture capital firms and investors. Robinhood, the trading platform that amassed over three million new users—many of them first-time investors—amid the pandemic, is even planning an IPO.
Thanks to tech, investment opportunities are no longer limited to those who speak the language of stocks
The rise of fintech, along with this industry’s mission to increase financial inclusion among its markets, has paved the way for more people to become active investors. Fintech platforms are able to meet the needs and desires of this new generation of investors.
Apps provide investors with financial and investment advice
Apps, online advisors, robo-advisors, and computer-generated recommendations can provide financial and investment advice to people who don’t have access to human financial advisors or investment training.
AI also plays a role in helping people make investment decisions. Peer-to-peer (P2P) lending platforms, for example, provide the option to have a certain amount of capital distributed among different loans using AI, based on the user’s risk profile and preferences.
There’s also no shortage of financial resources and influencers out there for a new breed of investors who seek more relatable investment advice. Singapore alone has dozens of blogs related to various areas of investment.
Many new investment platforms require low upfront capital
Assets that traditionally require a high minimum investment amount are now digitalised, allowing for lower barriers to entry. It’s now possible to buy as little as 0.01 grams of gold (approximately USD 0.60) through apps like Everest Gold, which offers digital gold units that are 100% backed by physical gold. While buying such a small amount of metal may seem physically impractical, it’s perfectly acceptable on a digital gold trading platform.
Investors can now easily access alternative and digitalised assets
For the new investor who gets intimidated by the language of stock trading, alternative investments are an attractive option. Alternative investments allow people to choose assets that they understand, care about, or are interested in. These can be anything from property to startup ventures.
By their digital nature, assets like cryptocurrency and digitalised metals appeal to certain groups of new investors, such as millennials.
Fintech investment platforms remove geographical barriers
Through apps, people can make investments that might not be easily accessible in their own country. Investment platforms like Everest Gold allow people from around the world to sign up and invest as long as they are able to authenticate their identity on the app.
Investment apps offer a convenient, digital-first experience
Digital platforms make it easier to begin investing— think stock investment apps, gold trading platforms, and online property portals that let you invest in overseas real estate.
One thing these platforms have in common is a convenient, fully digital sign-up and transaction process. There’s no need to visit a brick-and-mortar branch, wait in line, present physical documents, sign papers, and wait for days or weeks for feedback. Transactions can be processed instantly or within 24 hours, and users can make investments at any time of the day or night.
And it’s getting even easier. More fintechs are building application programming interfaces (APIs) that allow platforms to work with one another, making the online investment experience even more seamless.
Investment comes with risks. Here are some controls that fintechs are implementing
Some worry that allowing people with low levels of investment literacy to invest in assets would lead to personal financial disasters. A related concern is that malicious actors might take advantage of these newbie investors. Apps and investors might also encourage people to make risky, short-term investments and trades instead of investing for the long term.
Thankfully, there are controls in place to protect customers.
Regulation and registration
Users must make sure the platform they’re using to invest is regulated by the relevant authorities in the country where it’s registered. For example, Singapore-based Everest Gold is regulated by the Singapore Ministry of Law and is a registered dealer under the Precious Stones and Precious Metals (Prevention of Money Laundering and Terrorism Financing) Act 2019.
These regulators require financial institutions to assess the risks customers present by implementing sufficient Know-Your-Customer (KYC) processes.
Everest Gold has a stringent KYC verification process that users must pass before they can be qualified to trade on their digital platform. This involves verifying a user’s identity through a liveness test, creating an encrypted 3D face ID, and obtaining a copy of a valid international ID card or document, among other steps.
Some apps build a risk profile for each user when they sign up on the platform. This profile takes into account factors like the user’s income, risk appetite, and investment goals. The user would then be able to invest only in assets that match their risk profile.
Many platforms incorporate knowledge centres, tutorials, advisory, or news updates into their apps and services. They share real-time insights and live updates on the status of investments and on price fluctuations.
Video tutorials for investors of digitalised gold
This encourages users to make informed decisions. For example, an investor in digitalised gold would want to receive up-to-date information about gold prices and market sentiments. It also helps when platforms share video tutorials on investing both through their app and on social media.
New investment tools for a new breed of investors
Tech is enabling a new breed of investors, helping them overcome the challenges of investing and allowing them to make choices based on their lifestyle and values.