The Gamestop frenzy last week not only showed the power of retail investors but the popularity and risks associated with free trading apps.
Robinhood, which promises no user fees, faced backlash from investors after sharp swings in the value of stocks meant it was forced to restrict trading.
It has sparked debate over whether these unregulated products, that claim to democratise money, are out of control.
One fintech thinks it has the answer. Tel Aviv-based fintech Paykey works with banks to embed financial services within customers’ daily social interactions via its mobile keyboard.
This week it is launching a new product to allow banking customers access to day trading options with the tap of their mobile keyboard, available on Whatsapp, Facebook and Instagram among others.
Paykey’s new product will give consumers a chance to access a live investment tracker, manage their portfolio and make trades within a conversation.
“With Reddit WallStreetBets driving this latest trading frenzy, it’s clear social investing is a key part of the puzzle too. People want to discuss investment opportunities with their friends and peers before committing and any competing technology should embrace that,” chief executive Sheila Kagan said.
But the Reddit story has shown that there is a fundamental problem with retail investors approaching day trading so will even easier access to trading help?
Kagan said: “There is a huge opportunity for banks to step in to meet the growing demand for a more trusted and reliable alternative to this ‘wild west’ market of stock apps, – whose growth-at-all-costs business models are fundamentally at odds with customers’ financial health and wellbeing”.