Since the late 1990s, the online investing experience has been monopolized by online brokers. From physical branches to call-centers to websites and mobile apps, online brokers acted as a one-stop-shop for their customers to research and transact. Need to research a stock? Check your broker’s website for analyst ratings, fundamental data, and a risk profile. Need to check on your investments, place a trade, or add money to your account? Go to your broker’s website or app.
Today, the broker’s monopoly on the customer experience is weakened due to three new market dynamics:
- The internet has given investors endless places to conduct research.
- Investors expect highly customizable online experiences.
- Investors can now research and transact from third party websites and apps.
Brokers should not fear the distributed customer experience. They should embrace it as an opportunity. Brokers offer a product that is not replaceable: the ability to place trades at fast execution speeds, a safe place to store investments, and a funding portal. Whether the customer logs in via their broker’s website or via Snapchat, the broker still receives a commission when they place a trade. In other words, in the fragmented digital landscape, the broker’s most valuable asset is its ability to serve as a platform and a marketplace.
Brokers who adapt to this change will capitalize on the assets generated by their platform; brokers who resist will struggle to hold onto market share as their competitors tout a more customizable product suite.
Adaptive brokers will embrace their platform capabilities by extending their APIs across the digital landscape. This will create touch points with their customers in the apps and websites that they already visit regularly. The adaptive brokers will go to the customer instead of waiting for the customer to come to them.
For adaptive brokers, APIs will become powerful asset gathering vehicles. By integrating their product across the landscape of third party content producers, they will leverage these third party apps and websites as sales and product channels. Rather than devoting huge resources to developing their own niche products, adaptive brokers will plug into the niche products that their customers already use. From the customer’s point of view, the adaptive broker is tech savvy, customer focused, and flexible: all critical selling points to millennials, 75% of whom care more about up-to-date technology than in-person customer service.
By opening up to third party integrations, adaptive brokers will empower themselves to create their own great products down the line. Armed with customer engagement data from third party apps, brokers will learn how their customers interact in diverse environments, and use those insights to optimize their own product offering.
On the other hand, resistant brokers will have a tough time in the distributed digital landscape. New investors will be turned off by a broker that forces its customers into a mediocre one-size-fits-all experience. Thus, customer acquisition costs will skyrocket as new investors choose more adaptive open-platform brokers. Even existing customers will be less engaged for resistant brokers, since engaging with their broker requires going out of their way to navigate to the broker’s app.
Most importantly, change-averse brokers will miss out on crucial customer interaction data, as they do not have access to the websites and apps where their clients research their investments. Without a real-time feed into what drives customer engagement, antiquated brokers will lose touch with their customer base, and struggle to build innovative products that stay up to speed with the competition. From the customer’s point of view, change-averse brokers will appear technologically out of touch and ignorant to their desire for customization.
The Customer Experience, Reinvented
The message to brokers is this: embrace the distributed customer experience, or you risk losing the customer all together. Your APIs are an increasingly important way to understand what drives client engagement while creating new touchpoints with current and potential customers. The digital landscape is changing, and brokers will only be fully disrupted if they fail to adapt.