Old wolves of George St can’t stop the rise of the digital investor

Matt Leibowitz, CEO, co-founder of Stake. Source: Supplied.

The institutional old-boys of the Australian investment world are ripe for disruption. This grassroots movement isn‘t backed by mining, banks or superfund magnates though – it’s powered by a new generation of investors, demanding more and rejecting antiquated barriers to entry.

According to the Australian Securities and Investments Commission paper released in May, Australian retail investors traded more money, more frequently, as they tried to profit from international market turmoil.

Recent research from global international financial consultancy deVere Group also found that Covid drove a 72 per cent rise in the use of fintech apps.

Commentary from old-school money and investment managers might claim this new-found interest is superficial and opportunistic; all the while sounding self-serving warning bells about the possible blowback.

But the reality is – just as the work-from-home revolution – COVID-19 has simply accelerated what was already a burgeoning demand from a younger, modern investor to own their wealth progression through direct, active access to vehicles like the stock market.

New blood

The US market represents aspiration, inspiration and disruption from listed companies such as Tesla, Amazon and Apple, the latter’s market cap alone being about the same as the entire ASX.

Since the Covid lockdown, engagement with the world’s largest and most dynamic stock market via digital platforms has hit record levels.

Evidence of this has been the growth of the Stake community which now stands over 150,000 traders strong. The fact that 77 per cent of our customers have traded stocks before joining Stake paints the portrait of an experienced investor, hungrily looking to expand their opportunity-horizons. A very different picture to the reckless novices that the old-school pundits might have you believe they are.

This same investor demands a far superior experience and opportunity than the ASX and legacy brokerages provide; even the newer, cape-wearing entrants. The barriers that used to exist between Aussies and the US market no longer exist and they all want a piece.

Tech boom

This year’s third quarter has been the second consecutive record quarter for big tech investments, despite the global pandemic. We’ve seen this huge swing first-hand from Australians with Stake traders taking a slice of the world’s most innovative companies.

According to our trade data this year to date, we’ve seen a massive $674m USD traded in tech stocks – Tesla, Apple and Amazon. With an upswing of 3015 per cent in trade value on these stocks compared with the same time last year.

This highlights the thirst and aspiration of Australian investors in looking well beyond our local market to Wall Street and Silicon Valley for opportunity and innovation.

Change of guard

The age of passive investment, investment managers and large-scale investment funds making decisions for the people is gradually coming to an end. As Australia’s first zero commission brokerage, we welcome the new influx of other digital brokerage shops that are only now starting to see the writing on the wall.

It’s the changing of the guard, but we also must be mindful, as a new industry, that this shouldn’t be a race to the bottom with lower fees, cheap offers and slapping a shiny sticker on an existing service. We need to go further than that if we’re going to heed this movement and deliver real innovation.

Real innovation in this sector is ripping the walls down to provide the new breed of Australian investors access to the world of opportunity they so desire.

Matt Leibowitz is co-founder and CEO of Stake