How are Online Brokerages evolving in a commission-free environment?

Hosted in New York City, the Benzinga Global FinTech Awards gathered leaders of the financial technology space for a full day of networking, exclusive panels, awards and demos of the latest innovations. Trading Central was live on the exhibition floor, busy with a flurry of thought-provoking discussions around our new research solutions such as the disruptive AI newsdesk, TC Market Buzz

Change is Good: Evolving Brokerages for the Commission-Free Consumer Panel with TDA, WeBull, TradeStation

Trading Central’s Senior Director of User Experience, Kathryn St. John moderated a panel exploring how commission-free trading is pushing the brokerage industry to evolve. Alongside TD Ameritrade, Tradestation Group and Webull, Kathryn took the stage, guiding an insightful discussion around how today’s leading online brokerages are working hard to find new competitive advantages, guide beginners and harness emerging tech to proactively support a broader swath of investors. 

Benzinga Panel Logos

Key insights from the panel include: 

  1. Focus on a customer-centric investing journey: A commission-free market eliminates the ability to compete on cost. This brings forth an increased pressure on the investor's user experience as this will now be the main driver of both acquisition and retention. To create a strong user experience, brokers need to clearly identify their target audience, typically centred around specific investor types and demographics. Based on an understanding or empathy for these personas--how they prefer to interact and communicate--the broker would then design their platform’s offering from tools, support and tonality to create an experience thatuniquely solves for their needs. Some brokers believe that the future belongs to those brands that sharply cater to the needs of highly focused niches. Some brokers believe that the future belongs to those that achieve scale through acquisition and renewed focus on winning the assets of the most investors. 
    Benzinga Panel
  2. Leverage technology to achieve the scale needed to serve new cohorts: Implementing new technology that reduces the cost to serve is a critical focus area in this era of commission-free trading. Automated solutions will be a significant step forward in order to match investor’s digital expectations. Brokers have lowered the cost of entry into investing by removing commission fees and lowering account minimums, and so the panel explains how traditional brokers start to attract investors they weren’t previously supporting. We see new investors with lower account balances and high expectations that add pressure to the traditional brokerage system. This means more work for the broker with less return unless scale is achieved. Using technological tools to display data in a transparent, engaging way that reduces pain points perceived by these new cohorts will drive the industry forward, creating a customer-centric investing experience that truly helps investors do better and keep participating in the financial markets.
  3.  Adding alternative revenue sources: Brokers are finding new ways to implement fees into their services. Many brokers plan to keep the fees they are currently charging on other assets including futures, options and stocks in foreign countries. They are also looking to add new products such as cryptocurrency and exploring adjacent markets like sports betting . Some brokers are introducing new subscription fees or alternative account types to introduce new revenue streams from value add services such as advanced platforms and premium analytics.

Click below to watch the full panel!

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