The un(der)banked is FinTech’s largest opportunity

it contains the added caveat of a socialized investment risk. If a
community is created around a similar goal but there is a variance
in the skill sets that are brought to the group, then the consolidation
of all ideas is thought to yield a much more intelligent investment
decision. Furthermore, to encourage participation, many social media
enticements have been introduced, gamification chief among them.
By introducing competition, such as outperforming friends, investment
leaders, or known figures such as Warren Buffett, social media
encourages high performance and educates others as to what makes
for successful analysis.
Social and automated trading are emerging
Social trading differs from online clubs, as it allows users to
automate trades to follow individual traders based on
performance, investment style, or relationship. This approach is also
different from robo advising in that instead of trying to personalize a
portfolio based on a standard questionnaire and then rebalance the
portfolio accordingly, users are following an investor’s activities, even
if the style diverges from their initial intent. This model introduces an
element of investment risk as well as trust, but could also outperform a
robo advisor if the followed investor is able to foresee market events.
Furthermore, it opens up investment in different asset classes: Whereas
robo advisors tend to select ETFs and mutual funds, social trading sites
like ZuluTrade and FxPro allow investors to follow foreign exchange
trading strategies, and eToro, one of the most popular social trading
sites, allows investors to auto-invest in commodity strategies, stocks,
currencies, and indexes. These sites appeal to many millennial
characteristics: They encourage transparency, facilitate community
through strategy discussions, offer a lower management fee than an
advisor, and grant the user the ability to jump from strategy to strategy
seamlessly in an online experience.
This type of trading also engages the millennial work ethic. Many
sociological assessments of this demographic indicate that millennials
are less likely to “pay their dues” in their climb up the corporate
hierarchy. Social trading sites facilitate a platform on which higherperforming
investors can be recognized in a shorter period of time.
Furthermore, if successful, traders can grow quantifiable assets under
management, as counted by the amount held by investors following
one’s strategy, and build a track record faster than a young trader would
in his or her new fund. This type of recognition could enhance one’s
career, as well as satisfy the narcissistic qualities that are often
associated with millennials.
Strategy&
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