[AVIS D’EXPERT] The pandemic has led to a huge influx of new traders. But it’s not necessarily the banks that benefit. Decryption with our expert Guillaume Almeras, founder of the monitoring and advice site Score Advisor.
A few months ago, Lydia, the French fintech first known for its people-to-people payment service, launched a trading solution. This contributes to the expansion of the offer: a payment card, a current account, savings and credit and now also the possibility to invest in shares, cryptos or precious metals. From € 1, without having to download a particular application or open a brokerage account, for the price of an advantageous commission.
Lydia thus democratizes trade and in France such an offer remains quite unique (essentially challenged by other fintechs). However, other examples have emerged elsewhere, such as in the United States with Citi Self Invest. And the question is whether this approach is not destined to become widespread, with trading becoming a basic offer of banks, coupled with the provision of a current account. This would only respond to the fact that trading is becoming an increasingly common activity, especially among younger people.
Massive arrival of new investors
The turning point came with the health crisis. Especially in the United States, where many new investors entered the stock market during the quarantine, often very young, and many thus spend the stimulus check that has been handed out to 70 million Americans by the government. They were called the “Robinhoods” after the name of the online platform, founded in 2013, which was the first to democratize trade, make it as simple as possible and free.
Robinhood has thus lured investors into the stock market with no experience, no knowledge, many of whom have quickly fallen into the hands of outspoken manipulators who claim to be market experts on social networks. The SEC eventually investigated the phenomenon and the press widely reported the suicide of a young speculator who mistakenly believed he was a million dollars in debt after an options trade he misunderstood.
Despite everything, because of its success, Robinhood has, if not imposed free trade everywhere, at least forced the historic establishments in the United States to seriously lower their prices. However, this matter of tip is not essential. Real demand has emerged in many countries and new behaviors have emerged. In France in 2020, 400,000 people bought shares for the first time or for the first time in many years. Overall, share purchases by individuals have quadrupled.
Very quickly, some institutions that noticed this trend tried to give it more meaning: Merrill, ie by offering to guide investment choices, or Belfius by an orientation towards social and environmental responsibility. But most banks remain hesitant, if not completely embarrassed.
Decisive influence of online games
Robinhood has been widely criticized for not providing enough financial education to the investors, often newbies, who use its services. But the financial education that financial institutions generally provide – which teaches you to manage your money wisely and be content with what you have – is exactly what more and more people, especially the very young, no longer want to hear!
They want to be active, diversify their sources of information, try their luck and, for some, further assert their beliefs. It looks like a game, but make no mistake, it’s actually a lifestyle. The decisive influence of online games, on the other hand, is felt in the fact that complexity does not defer (cryptos benefit from it) when the experience is shared within a community.
All in all, a rather strange phenomenon occurred during the health crisis that we largely miss: the financial world managed to arouse a certain jubilation among many. It is therefore difficult to keep the old advice to act like a good father when his clients wonder how they can make a fortune in a few clicks. However, sound advice seems more necessary than ever to avoid fooling many. For that it is still necessary to get into the game To develop offers that respond to a new trend: financial advice must now contain a dimension of excitement. Extensive program.