MERCHANT SOLUTIONS

Ask the expert – Can payments help convert investors and increase deposits across the European retail investment market?

Darren Barber | sales executive senior, Worldpay from FIS

June 25, 2021

European retail investing has boomed during the pandemic. With lockdown restrictions, lower bank savings interest rates and significant market volatility, over the last year we’ve seen people spending less and turning to investing.

Remarkably, at the start of the pandemic 150,000 retail investors bought French blue chip stocks for the first time in at least two years, while purchases by French retail investors increased fourfold.

Meanwhile, one major Danish stockbroker saw its average daily equity reach $5.5 billion in the first five months of 2020, more than twice the $2.6 billion seen in the same period of 2019. And one UK outlet said it saw “a significant increase in trading” over the first month of lockdown, with the buy-to-sell ratio at 70:30 for April 2020.

This rise in trading has been echoed by a steep rise in investment platform sign-ups. But while all of the UK’s major investing platforms reported a rise in direct share investment during the pandemic, the relatively low number of deposits made by their new customers has surprised platform analysts. A major challenge for the industry may be converting new sign-ups into new users – and an optimised payment strategy could well have a role to play.

How can the investor experience help boost customer conversion?

The European wealth technology industry has spent a lot of time and money on customer acquisition in recent years, often through marketing and advertising. But to become a market leader, it’s vital to create smooth user experiences for your customer base. In an increasingly competitive market, brands that are concentrating on making their platforms quick, easy and intuitive to use are growing at pace.

What sets these platforms apart is their ability to meet the expectations of modern customers. The giants of video streaming, food delivery and taxi services have set the pace in their own sectors by creating seamless user journeys which includes the payments stage – something now expected in wealthtech and the wealth and asset management space.

In a sector that is experiencing a wave of new users, making the platform simple and easy to use can make the difference between a long-term conversion and a potentially losing a customer. Trading platforms should know that clarity, speed and ease of using their service may encourage investors to make that all-important first deposit – and keep them redepositing.

How do payments contribute to customer experience?

The payments stage can be considered the final barrier to conversion, and any unnecessary extra steps could lead to abandonment. According to our Power Your Payments study, 37% of financial services customers surveyed would drop out if they can’t pay using their preferred payment method. This essentially means that platforms may wish to make their payments process as seamless as possible and allow investors to pay quickly and easily via their preferred payment method. Where possible, avoid delaying the process by redirecting users to a separate payments page, and keep them within the platform ecosystem.

Trading platforms should pay attention to their time-to-deposit: An efficient payment process allows investors to react quickly to the price changes in the market. In recent months, a number of high-profile market movers have highlighted the need for traders to act fast in order to capture their desired market price; so, platforms that empower users to pay for trades according to their preferences may gain an advantage over their competitors.

So, which payment methods should be considered?

Payment preferences vary by country, so when you’re choosing which types of payments to accept, it’s important to work with experts who understand local payment practices. As a general rule, debit cards are a great place to start in Europe, while digital wallets like Apple Pay and Google Pay complement mobile-optimised wealthtech and investment platforms because of their fast, user-friendly and secure nature. What’s more, because digital wallet payments tend to feature a biometric security step, they help your platform combat the threat of fraud.

Open Banking is another important option to consider. With the power of Open Banking, trading platforms can initiate real-time bank transfers that may reduce transaction fees and lower the risk of chargebacks – all through one integration. At the same time, investors can make fast, automated payments using a method that they can trust. This could be a game changing feature for the wealth management space because this could potentially enhance both time-to-deposit for investors to make trades and time-to-withdrawal, improving investors’ experience when they want to liquidate their profits.

How do I know which payment experts to work with?

Worldpay from FIS® offers all the solutions mentioned above and more. With access to 146 markets, more than 300 different payment methods and 126 currencies, we can empower your customers to pay their way.

We hold 50 acquiring licences and 40 years of experience. And, as the first acquirer to deliver multicurrency, cross-border payment experiences, we have significant experience in entering new European markets.

In addition to processing card transactions, we can help you offer over 300 alternative payment methods or reap the benefits of Open Banking with our Open Banking Hub.

To find out more about optimising payments to unlock your platform’s potential, reduce costs and grow your business, get in touch today.