In Southeast Asia, 60 million new consumers joined the digital economy throughout the pandemic, representing 10 per cent of the total regional population pivoting to online services, including financial platforms.
Online services have been redefining the user experience, from ordering car rides to buying insurance to trading assets. Users can now access a myriad of services from the convenience of their phones in smart and effective ways.
Led by the access provided by technology, the pandemic saw a new financial consciousness and ownership, led by younger generations and a rise in the retail investing trend. Today, retail investors make up nearly 25 per cent of overall stock market activity.
Reshaping online wealth management
Social investment platform eToro found digitalisation was a key driver to democratise access to capital markets.
Its recent Retail Investor Beat survey of 8,500 respondents across 12 countries showed that younger investors are leading in market participation by placing their trust in online investment platforms, now becoming the most popular method amongst those aged 18-34 (61 per cent).
Their increased reliance on smartphones has changed consumer habits and expectations, who now prefer online products for wealth management. This preference for a virtual set-up contrasts with older investors (aged 45-54) who prefer using a bank (55 per cent).
With tech offering more access and new solutions, the elitist financial system will face significant challenges capturing younger demographics and future wealth holders.
eToro’s research also found a ‘set and forget’ approach to investing is on the rise, with a third (37 per cent) of young investors believing that checking on their investments once a week is the ‘sweet spot’, and 32 per cent buying or selling their assets only once a month.
More mature demographics adopt a similar approach but are more inclined to hold their assets for longer, with one in four (24 per cent) selling only once a month.
Social as the new investment advisor
New sources of financial knowledge and advice are also gaining ground. While using recommendations from friends and family before investing remains the most popular source across demographics, 32 per cent of younger investors also seek financial advice from social media platforms such as Facebook, YouTube, Instagram, and TikTok.
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Their preference for these avenues is more than double that of their older counterparts, with only 15 per cent turning to social media and instead preferring (38 per cent) to traditional outlets such as newspapers. Online forums are also gaining popularity, with nearly a quarter of those aged 18-34 looking at Twitter and Reddit for guidance.
Challenging the norms through access and education
Tech and digitalisation act as catalysts for inclusion and access in financial markets. We see younger demographics participating and recognising the importance of starting their investment journey sooner rather than later to set the foundations for their financial well being.
However, as democratisation increases, we also see a surge in financial disinformation as anyone with a smartphone can create content and share knowledge.
As social media and online forums become increasingly integrated into retail investors’ decision process, it is digital investment platforms’ responsibility to warn about the potential risks and create content and educate their users.
While reshaping expectations of online wealth management, digital investment platforms will continue to be a powerful tool to increase access to capital markets and increase financial wellbeing in Southeast Asia, but the sector will also need to understand they are not only financial enablers but must act as financial educators, and complement investors’ research.
Today’s leading companies have made the most of technology and innovation, challenging norms of traditional finance and must engage and educate users in new ways.
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