The Australian direct-to-consumer investing market has lagged behind other markets, giving outside players an opportunity to take advantage of the gap, according to a new report.
The Digital Wealth Report from Investment Trends has examined more than 100 digital wealth applications and services launched by fintech start-ups and established wealth institutions.
The research concluded banking relationships are being redefined as fintechs and banks are increasingly competing on insights and behaviour management and the direct-to-consumer (D2C) investing space remains “ripe for disruption”.
Although a number of local fintech start-ups have targeted consumers with microsaving, investing with automated savings taken from transaction round-ups, Investment Trends has noted that Australian investment product providers have lagged.
Michael Blomfield, chief executive at Investment Trends, commented that automating savings behaviour is a “powerful proposition”, and “many apps have further improved the simple round-up functionality first introduced by acorns in the US to give greater flexibility and control, providing low friction”.
“Yet progress in the Australian D2C investing space has lagged overseas markets such as the UK and the US,” Mr Blomfield said.
“Apart from a handful of start-ups like Raiz, Stockspot and Clover, Australian investment product manufacturers have been slow to develop their D2C offering, leaving the market open for overseas players.”
Reshaping banking relationships
According to the white paper, many fintech start-ups have identified personal financial management (PFM) as an under-serviced area, and in response many established banks have improved their retail online banking portal functionality.
“Local fintech start-ups like MoneyBrilliant, Frollo and Pocketbook have introduced solutions that empower Australians to take greater control of their spending and saving habits, while also challenging the established retail banks to step up,” Mr Blomfield said.
He also pointed to mobile apps such as Up, Revolut and Mozo which provide transaction capabilities through a debit or credit card, helping users monitor their spending and savings in real time.
“Personal financial management is evolving from spend tracking based on historical data to focus on providing users with real-time actionable insights and behaviour management,” Mr Blomfield commented.
“Looking ahead, the open banking initiative will intensify competition and encourage consumers to reassess their relationship with their main financial institution.”
Netwealth, MoneyBrilliant ranked top providers
Investment Trends also evaluated applications used to deliver wealth services to consumers.
Netwealth took the prize as the highest overall ranked digital wealth application/service among established wealth institutions, while MoneyBrilliant topped the list of fintech start-ups.
The five highest overall ranked digital wealth applications/services among established wealth institutions are:
The five top-ranking fintech start-ups are:
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