[AVIS D’EXPERT] The pandemic has created a massive influx of new traders. But the bank will not be profitable. Decryption with our expert Guillaume Almeras, founder of the monitoring and consulting site Score Advisor.
A few months ago, Lydia, the French fintech known for its first in-person payment service, launched a trading solution. This contributes to the expansion of its offer: a payment card, a current account, savings and credit and now, the possibility of investing in stocks, crypto or precious metals. It costs from €1, for convenient commissions without having to download a specific application or open a securities account.
Lydia democratizes trading in this way and this type of offering is quite unique in France (challenged by other fintechs of course). However, other examples have been seen elsewhere, such as in the United States with City Self Invest. And the question is whether this approach is destined to become widespread, with trading becoming a basic banking offering, coupled with the provision of a current account. This will only respond to the fact that trading is becoming an increasingly common activity, especially among younger people.
Massive influx of new investors
The turning point came with the health crisis. Especially in the United States, where during confinement, many new investors appeared in the stock market, often very young and many thus spending the stimulus checks distributed by the government to 70 million Americans. They are called “Robinhoods” after the online platform created in 2013, which was the first to democratize trading, making it as easy and free as possible.
Robinhood thus attracted investors to the stock exchange with no experience, no knowledge, and many of whom fell into the hands of outspoken manipulators claiming to be market experts on social networks. The SEC, the police of the American stock market, investigates the incident and the press widely reports the suicide of a young speculator who believes he owes a million dollars after a botched options trading.
In spite of everything, because of his success, Robinhood, if not imposing free trade everywhere, at least forced the historic buildings of the United States to seriously reduce their value. However, this question of gratuity is not essential. In many countries, a real demand has arisen 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. In total, share purchases by individuals have quadrupled.
Very quickly, some institutions, noticing this trend, tried to help it find more meaning: Merrill, thus, by offering to guide investment choices or Belfias through an orientation of social and environmental responsibility. But most banks are expectant, if not outright embarrassed.
Decisive effects of online games
Robinhood has been widely criticized for not doing enough financial education with investors, often new to those who use its services. But the financial education that financial institutions usually provide – which teaches you to manage your money wisely and be content with what you have – is precisely what more and more people, especially the youngest, no longer want to hear!
They want to be proactive, diversify their sources of information, try their luck and, for some, strengthen their convictions. It looks like a game but make no mistake, it’s actually a lifestyle. On the other hand, the decisive effect of online games is felt in the fact that the complexity does not stop (crypto benefits from this), when the experience is shared within a community.
After all, during the health crisis, a rather strange phenomenon intervened that we miss seeing again: for many, money was able to evoke a certain joy. So it’s hard to make old advice work as a good dad when his clients are wondering how to make a fortune in a few clicks. However, sound advice seems more necessary than ever to keep many from moving. It is still required to enter the game To develop offerings that respond to a new trend: financial advice must now include a dimension of excitement Comprehensive program.