Small investors are driving the growth of e-trading around the world, including in Latin America, although more timidly
It is common for Latin America, the Middle East and Africa to be seen as the main markets receiving investment. Nevertheless, these regions today also begin to actively participate as investorsespecially in terms of e-trading or inversion online.
Rapyd, decacorn and global fintech-as-a-service platform that allows companies and consumers to participate in local and cross-border transactions in any market, conducted an analysis that shows how investing in stocks is no longer something exclusive of stockbrokers.
In recent years it has been democratized and today it is within the reach of the so-called “small investors”.ordinary people looking to diversify their assets around the world.
Cryptos are one of the most popular assets
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E-trading and small investments
Small investors only need a minimum balance, an Internet connection and a digital trading platform to be able to invest online through e-trading with financial assets.including stocks, mutual funds, cryptocurrencies, and fractional shares.
The The popularity of online investing has been growing rapidly around the world.because the number of people using trading apps rose from 35.6 million in 2017 to more than 150 million in 2021, and this emerging investor class drove revenue for trading platforms from $3.8 billion to $10.9 billion in this same period in the app business.
Digital platforms are necessary for investors
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Although investor growth slowed as the market cooled, this is an important trend to watch as more and more people begin to take control of their financial futures.
How is the participation of small investors in our region? How is Latam doing vs the rest of the world in this regard? What are the barriers to the full development of this practice in our countries?
Rapyd shares part of its global analysis to understand the local scenario and how this phenomenon is taking place in Latin America:
- Attractive option but with some barriers still: There is a growing enthusiasm for investing and trading online, although on a much smaller scale than in other markets such as the United States and Canada. This is due to more limited financial digitization and technological access, fewer financial resources, and less regional financial literacy.
- Need to improve financial education: Many people in Latin America are unwilling or unable to invest because they are not familiar with fundamental financial concepts.
- Impact of the pandemic on savings and therefore on private investments: People can’t invest if they don’t have savings or a safe way to save. The region was hit hard by the pandemic, depleting resources for investment. 30% of investors on this side of the map reported a severe setback in their financial security. (Natixis Investment Managers).
- Development of new technologies and financial proposals break down barriers: For a long time, investors in LATAM faced barriers to investing in the US stock market and other destinations abroad. With open banking and the rise of fintech, LATAM can invest more in US stocks and where it seems most seductive, as is the case with cryptocurrencies.
- Still not something for everyone: Although Latam high net worth investors have already started investing in the US and Canadian markets, most consumers will need more resources and access before getting involved in stock trading (Morgan Stanley).
“In recent years, investment platforms and online trading applications have removed barriers and simplified investing for beginners and non-traditional investors. from all backgrounds and from all over the world. In order for these platforms and apps to reach new customers and increase their revenue, they need the right partner to provide a local payment experience anywhere in the world, through a single system,” said Juan Huezo, Sr. Director, Product Strategy at Rapyd.
“In Latin America there are several applications of e-trading. However, we believe that the biggest growth opportunity is for those that allow users to transfer funds using the payment methods they already trust, what can be achieved through a platform like Rapyd,” he concluded.
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