What’s going on here?
The financial services industry is changing as we speak, so we hosted eToro’s US CEO Lule Demmissie and TradeStation’s president and CEO John Bartleman to discuss how to build and scale investment platforms fit for today's world.
What were the highlights?
The evolution of the financial services industry
Panelists saw a new generation of investors enter the market during the pandemic, which accelerated three secular trends:
- The use of technology for more dynamic financial planning and advice
- An increased appetite for risk from self-directed retail investors
- Retail investors’ growing trust in the wisdom of their peers
The shift in how younger cohorts want to engage with the financial services industry is one all companies need to navigate – and it’s likely that the solution will involve a number of different players, rather than a single one-size-fits-all winner.
Artificial intelligence has transformational potential
AI’s proliferation into multiple investing and trading use cases has led TradeStation to opt for a partnership-driven approach. The company’s goal is to empower other platforms to offer richer features through its API.
eToro thinks the industry’s been underestimating retail investors, and sees AI as providing an opportunity to close the information gap between them and professional investors. For some, that’ll involve an AI-enhanced research process, but others will trust AI tools to help design portfolios and pick their investments.
“40% of people believe AI will be a central part of their investing habits right now and in the future.” – Lule Demmissie, eToro
The role of education has changed significantly
Learning’s split in two ways now. Younger investors turn to social media for a broad education and then learn the specifics of how to achieve their goals with a given provider. Older investors, on the other hand, still tend to prefer a more classroom-style approach to learning.
Additionally, an important method for learning is “learning by doing”. Behavioral science has shown that if you don’t practice the doing through the process of learning, you’ll never get started.
Another factor is the way that institutional knowledge is being decentralized. Retail investors still value the input of an expert asset manager, say, but it’s still only one factor in their decision-making process, rather than the be-all and end-all. At the same time, retail investors are increasingly educating themselves and each other by sharing their know-how. Firms are also using the power of “edutainment” to appeal to investors, incorporating fun elements into their strategies to blend learning and engagement.
“There is no learning without fun.” – Lule Demmissie, eToro
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How to measure the impact of content
Our panelists highlighted a few ways of thinking about this. For one, the traditional methods of measuring digital marketing still apply. That means looking at content positioning, messaging, creative, and the throughput of the piece – opening an account, funding an account, all the way to first trade.
“One of our KPIs is ‘time to first trade’. We can actually track that all the way through our funnel.” – John Bartleman, TradeStation
When it comes to educational content, measurement isn’t entirely financial, and we’ve just scratched the surface in terms of gauging its true impact. Here, the things that matter most include views, dwell time, and customer satisfaction scoring. For existing customers, it’s also key to track whether content has led to improved outcomes, both in their investments and from a lifetime value perspective.
But not all content is created equal.
“If we create content with context, we get higher pull-through rates. That’s content relevant to the moment, whether it’s the Fed speaking or something else.” – Lule Demmissie, eToro
How to scale in new markets
Our panelists shared several tips. Here are two:
#1: Take small steps.
“The biggest thing for us and our success was not trying to bite off too much.” – John Bartleman, TradeStation
#2: Do non-scalable things to quickly test your idea before ramping up your costs.
“In order to scale, you need to do things that don't scale.” – Reid Hoffman, LinkedIn
Why should I care?
Our panelists discussed whether “old-school” tech firms might enter the fintech space. On the whole, they think that firms with either a compelling proof of concept or a background in finance (think PayPal, for instance) could ramp up their efforts. And while total newcomers might hesitate due to regulatory challenges, there’s a simple solution to that: partnering with existing fintech services, to offer features to users without having to build something from scratch and navigate regulatory mazes.
“Companies become really big, and then they go through the bloat, and challengers come up and challenge them.” – Lule Demmissie, eToro
So, with competition potentially on the rise, getting a sense of how industry-leading execs are thinking about the role of education, content, and scaling could inform your strategy and help create value for your business.
“I think all products should be focused on engagement and content to some degree.” – John Bartleman, TradeStation
“Content is the oxygen for anything to do with growing, amplifying, and scaling. Without content, you are invisible.” – Lule Demmissie, eToro
Get even more insights by watching the full conversation on YouTube