Despite the fact that investors have seen increased turbulence across financial markets the last two years new investors keep adding to their portfolio at all-time highs. Statistics presented by lobbying groups show that Aksjer Norge has increased in popularity across the board. For the year 2020 more than 90.000 Norwegians bought their first stocks in the public market.
This raises the question; why do so many suddenly purchase their first stocks? We believe much of it can be traced back to Fintech and the way they made stock markets accessible to everyone.
While fintech for many is associated with revolutionizing the banking industry, both investing and saving also experienced their own disruption. For while traditional investing through brokerages belonged to the rich and powerful, the new age of digital brokerages has made investing available to anyone with a few bucks set aside. Now we’ll take a closer look at how fintech changed the way we invest today.
The first way fintech companies such as Robin Hood, M1 Finance, and a bunch of other platforms disrupted the investment industry was by cutting the commission to zero. Previously you’d have to pay a commission for every trade you executed with your broker, which made it financially unsound to invest small amounts.
For many, this became a natural barrier and kept them out of investing altogether. Now with zero commission, anyone can invest starting with amounts as small as $10, which really made saving through stocks much more available to the masses.
Another way these new fintech companies changed the way people purchase stocks was by increasing availability. Previously you would need to communicate with your brokerage directly or have access to complicated trading platforms such as Bloomberg and Infront. These days you can buy and sell stocks online, through your phone or tablet without the need for anything else.
This means you no longer need any special software, expensive hardware, or contacts to purchase stocks. All you need is your phone and a downloadable app.
Back in the day, your only way to learn about investing was through reading massive chunks of books, or by having someone inside the financial world showing you the ropes. Today on the other hand most digital brokerages offer simplified education about how the markets function.
Additional to this you can find podcasts, video series, and websites that offer instructional education for new investors. A series of fintech startups offer their own educational library and community platforms to share their experiences with other investors.
Through fintech platforms, new masses of investors gained access to what was previously an exclusive club. These days anyone with a phone and a few bucks can get started on their investment portfolio. This allows a wide array of new people to enter the financial markets and put their savings to better use.
We expect that fintech will continue to open doors in the investment world and allow even more people to start investing in the next decade.