Announcing: Digital currencies now supported via TradeIt through integration with Coinbase

We’re pleased to announce that we’ve connected our core product — Portfolio View — to Coinbase, a digital currency exchange with more than 10 million users and more than $50 billion in trading activity in digital currencies such as Bitcoin, Ethereum, and Litecoin.

“With our TradeIt partnership, Coinbase users will now have the ability to view their digital currency holdings on web portals such as Yahoo! Finance.  As digital currency trading volumes build and trading becomes more mainstream, partners like TradeIt and Yahoo help provide easy access to retail investors, anywhere and anytime.” said Sam Rosenblum, Director of Global Business Development at Coinbase.

TradeIt enables our partners – developers, publishers, social networks – to easily add digital currencies via integration with our SDK.  With this expanded support of digital currencies, Yahoo! Finance has gone live with our Portfolio View SDK.  Yahoo! Finance users will now be able to link to their Coinbase account and monitor their positions in Bitcoin, Ethereum, and Litecoin.

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TradeIt’s platform is designed to support your platform and your end users in their financial journey.  TradeIt supports equities, ETFs, options, FX and digital currencies.  Enabling our partners to quickly and easily integrate additional asset classes that end users are looking for drives our product roadmap.

“We are excited to be expanding our coverage of securities and adding digital currency support to our core products,” said Nathan Richardson, co-founder and CEO of TradeIt.  “Supporting our partners with easy to integrate solutions for their apps is key to our efforts in enabling developers and publishers to meet the needs of their end users.”

Unbundlings: Disrupting the Disruptors – Part 2

This is part 2 of our 3-part series on “unbundlings”. Read Part 1 here.

You Get an API and You Get an API. Everybody Gets an API.

Picture this: You’re a consumer. At your fingertips you can view rebalancing, set it and forget it, algorithmic products, monitoring, alerts, coverage calls, portfolio analysis, performance, fractional buying and other products—all via your favorite apps. That’s the world we’re headed towards. Already you see companies like Wells Fargo have a “Gateway” of plug & play APIs, and BlackRock offering their own “hackathon”. Both inviting developers to have “financial data sets at your fingertips”. Keeping your products closed is the quickest way to close your doors.

     

Use What You Have

In reality, most investment firms have the products and tools to do what the FinTech companies are doing, they just need to be re-packaged and exposed. BlackRock, the world’s largest Asset Manager, added more assets in the last quarter than the entire FinTech space has under total assets. BlackRock also has a powerful set of APIs that could easily be distributed onto a retail platform like StockTracker to allow their users to rebalance or set up an auto-algorithmic portfolio tool and allow them to pick any broker-dealer. It’s only a matter of time before this happens…and it will.  

Prepare for the Outcome

  • Ensure you have an API for each tool that you view as high value on your platform, such as rebalancing, auto-investing, sweeps, funding, etc.  
  • Spend less time worrying about building a Robo to compete with Wealthfront and spend more time putting your Robo into an SDK that can be put in front of consumers where they want it.
  • Partner with Asset Managers to understand the tools at their disposal to grow assets and understand their differentiators (e.g., are they a low cost provider like Vanguard or wed to an advisor network with the associated costs?).
  • Build an API Storefront of the high value items that your company believes will drive your business forward.
    • If your company’s primary goal is AUM, expose an account transfer and account funding API
    • If your company makes 40% from options, expose your Options API

Don’t expect the customers to come to you—put your best product(s) in front of them without friction.

Unbundlings: Disrupting the Disruptors – Part 1

In our previous post, we posed the question of whether or not Asset Managers would move closer to customer relationships as they race to acquire more assets. [And, as we go to press and will cover in our next post, RIABIZ News reported that BlackRock is indeed getting closer to retail customers.] The questions and feedback we received inspired us to say a bit more about what we mean of these “unbundlings”. But first, we need to restate some of the behavioral shifts in digital and customer expectations. What follows is part 1 of that exploration…  

The Customer Journey – They Want It Now

Today more than ever, consumer attention is increasingly tricky and even more expensive to get. Given AI and the other predictive technologies available, if you’re lucky enough to garner consumer interest, you should (and need to) be able to communicate the action that’s on their mind. Otherwise, you’ve lost them. In order to create stickiness, financial Institutions need to start using latent technology, data, and other signals to surface the component of their customer journey at the right time (and the technology and messaging platforms need to be able to deliver).

Increase Reasons for Intentional Engagement vs. Nagging-based Fear Engagement   

Account opening, funding, rebalancing, monitoring and closing occur not only at different life stages & life events, but at different times of day, in different locations, and for 500+ other different reasons. We’re already seeing “set it and forget it” apps use native advertising to target consumer acquisition by leveraging these 500+ other data points, but why not put the action you’re writing about right in front of the consumer? Remember, consumer psychographics play a huge role in site visits and retention. Give them what they came for.

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You’re In or You’re Out

Apple, WeChat, and WhatsApp allow you to make payments natively in their app. If you’re a broker/deal or investing firm, now’s the time to get a seat at the table with your product. The question is not if but when these mega platforms will offer what you do — with or without you. Not only have we revealed our take on them…

Looking to China: What Facebook and Snapchat can learn from WeChat  

Apple Pay Cash launches in beta today, letting you send and receive cash in Messages

Facebook Messenger beats WhatsApp and Apple with clever new payment feature

Prepare for the Outcome

  1. Build your technology: If you have a mobile app you already have the APIs, the question is whether you can turn each piece of the customer journey into a component to be surfaced for each activity.
  2. Build your components: Include your differentiators – brand, price, legacy or some other USP. If you believe in your differentiators, there’s no reason to fear putting your components in front of your customer.
  3. Monitor the landscape: Use the resulting benchmarks (a product /feature comparison and time trial) as a set of goals for your team. For instance, if the top online account opening product takes three minutes to complete, how do you beat that, given that time to completion is a known point of friction to new customer acquisition?  
  4. Collaborate and push the platforms: If you’re spending marketing dollars on a platform, you should be asking them to enable transactions/actions to occur natively on these platforms rather than risk losing the customer in the old model of CTR.  

In part 2 we’ll cover the tools you need to deliver on the promise of everything-at-their-fingertips as well as why an open API could be the difference between your company’s life or death.

 

Chasing Zero

If you’ve ever visited a financial news site, you’ve likely been bombarded with offers for “Free Trades” or “Lowest Costs per Trade”. Since the earlier days of the online brokerage industry, the competition for the lowest cost per trade has been fierce. So fierce that the two largest and grandest in the space, Fidelity, and Schwab, launched the latest fee war earlier this year which we wrote about.

You may also be aware that Robinhood, a venture-backed unicorn, is now offering “free trading” and even putting an interstitial in your log-in flow to entice you to move your assets from other brokers to them. What gives?

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Mo’ Money, Mo’ Profits

While Robinhood makes money by selling customer order flow, the largest financial institutions make money having Assets Under Management (AUM.) The more money that they have under management, the more money they make. And it appears that investors have turned the screws on Robinhood to make more money given their aggressive (ab)use of competitor’s Trademarks & Logos (as seen above) to shift assets to the free brokerage.

The chart below shows just how much a brokerage can make when they have more assets under management—which is tied to where interest rates lie. In a zero interest environment, which we were between 2008-2016, it’s harder to put AUM to work, but once interest rates rise, those with the most assets win—which is why you see the financials of top public brokerages recording record profits despite lower trading volume.  

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No More Soft Sell

Traditionally brokerages do not aggressively push customers to move their assets from one account to another. In fact, Fidelity was the only brokerage to not charge or put a financial disincentive to do so. However, as Robinhood has taken Trump-like tactics to the brokerage industry, we suggest the only way to beat them is to “hit them back 10x as hard.”

Here are a few examples of how to do that:

Broker Full Transfer Out Fee Partial Transfer Out Fee Account Closing Fee Transfer Reimbursement and Other Offers
E*TRADE $60 $25 $0 None
Fidelity $0 $0 $50 IRAs Up to $100 fee reimbursement with $25,000 account transfer
OptionsHouse $50 $0 $0 Up to $100 fee reimbursement with $3,000 account transfer
Schwab $50 $25 $0 None
Scottrade $75 $75 $0 Up to $100 fee reimbursement with $10,000 account transfer
TD Ameritrade $75 $0 $0 Reimburse any ‘reasonable’ fee but would not provide minimum account balance nor maximum fee
Ally Invest $50 $0 $50 IRAs Switch to Ally and get up to $150 in transfer fees reimbursed.Requires $2,500 account transfer and excludes IRA

 

Rising Rates

Look at E*Trade, for example. ETFC had a 20% drop in their largest income generator of “interest income” and close to a 40% drop after the interest rate drop post 2008. Yikes! Their interest income earned has remained flat until the last year when for the 9 months ending 2017, they saw a 24% increase in interest income due to increased interest rates.

While the biggest driver or other income (which is still only ¼ as much as the interest income) is fees from derivatives (read: options), trading for equities is flat across the board but derivative products are increasingly important accounting for 34-50% of the volume.

In other words, with interest rates set to keep rising, companies can’t take their foot off the gas when it comes to increasing AUM. How do you plan to bring in more in the coming months and years? And moreover, what is your retention strategy once you have them? Is the race for AUM the beginning of consolidation? Or do you think that the AUM race will accelerate asset managers getting that much closer to retail customers?