Exclusive: ‘A Stake in the future’ – Dan Silver, Stake in “The Fintech Magazine”
The pandemic has created a new generation of investors, disillusioned with non-performing savings products and eager to take control of their assets. Online trading platform Stake is on a mission to give them access to the world’s biggest stock market, as Co-founder and COO Dan Silver explains
While some of us fought lockdown boredom by taking up home breadmaking and kindling an interest in patios and flower borders, others were finding a much more profitable use of their time. Amidst the restrictions of the COVID-19 pandemic, many of us decided to take more control of our money – and our personal stake in the economy.
Much of this increase in financial interest has been tracked by research published by the deVere Group. It identified that, in Europe, the coronavirus pandemic inspired a 72 per cent rise in the use of fintech apps. Among those are an increasingly number dedicated to giving more people access to what’s broadly described as wealth management, butin the current climate might be better termed ‘restricted means management’. Online trading platform Robinhood, for example, reported a 10-fold increase in net deposits in March, while Acorns and Public similarly saw surges in usage.
Another was Stake, which is exclusively focussed on giving anyone who wants it a foothold in the largest stock market in the world: the US. Launched in 2017, Stake is a commission-free trading app for stocks and exchange traded funds (ETFs). Initially made available in Australia and New Zealand, it has been active in the UK since February 2020. Earlier this year, it was soft-launched in Brazil – the next step as it continues on its mission to bring Wall Street to the world.
As co-founder and COO Dan Silver sees it, the pandemic has opened people’s eyes to how the financial markets have a direct impact on their lives.
“I think it’s made people relate directly to companies that have been either significantly positively impacted or negatively impacted,” he says. “They can look and say ‘I want to go and invest in Zoom’, or, ‘I want to invest in Peloton, because I’m running those cycle classes’. Or, conversely, ‘I don’t want to touch P&O’.Whatever it is, people are now seeing shares not just as financial products, but as companies that have a direct relevance to their own day-to-day.”
With this in mind, Stake’s mission statement is to make the US markets ultimately accessible to anyone, anywhere.
“It’s a bold aspiration, but really, our view is that the US stock market is the largest market in the world, it represents more than 40 per cent of the world’s market cap, and everyone should have the opportunity to invest in it,” says Silver.
These more active, small-fund, retail investors require transparency in a process that’s historically been very opaque (particularly when it comes to fees), easy to understand, safe and fast to execute. Stake aims to deliver on all of these.
“It’s a great time to be in brokerage and a great time for customers to be getting into the market. There are more options, more access, better opportunities than there ever before,” says Silver.
“But with a lot of new providers entering into a market, you really need to understand what each one stands for, and what products are they actually serving? So, for example, if you’re somebody who wants to buy a share, a provider can market that in many different ways, but in some cases they may be offering contracts for difference, which is a product where the majority of customers are actually going to lose, not make, money.
“You’ve also got a lot of people offering non-transparent fee structures – people go into it thinking that they’re getting a great deal, and suddenly they’re not. Or customers are in some ways being made into the product – being brought in on a low-cost offering, but then being upsold into other more risky assets. So, a lot of it’s about transparency in the industry. Stake is on a mission to make sure that there’s full transparency and open it up.”
Stake is all about owning the user experience and the customer interface, says Silver, while partnering with others to make sure the backend lives up to the promise – and ensuring ‘a good commercial outcome from this [for them] as well’.
Key partnerships with identity verification provider Trulioo and payments partner TrueLayer has streamlined two crucial components: ensuring swift and watertight KYC in whatever jurisdiction Stake’s operating in, and making deposits and FX transfers to US dollars to trade simple, fast and cost efficient.
Stake has found ways to leverage open banking to tackle all of these, ensuring a smooth customer onboarding UX that gets clients set up and trading as soon as funds hit the account.
“To be able to do that, you’ve got to have a way for people to fund in-app,” says Silver, “rather than having to leave the app to make the transfers.
“You also need to understand exactly what the local requirements are in different markets. Probably 80 per cent of our product is similar, but the 20 per cent that’s localised is very important, whether that’s in terms of the onboarding fields and questions, and how we verify customers – that obviously differs by jurisdiction – or how people move money into accounts, whether it’s sterling, or Aussie dollars. So there are small but impactful differences.”
Leveraging open banking frameworks and plugging in APIs with third parties that are expert in those areas, has allowed Stake to focus on its main priority of continuing to enhance the core product, all the while getting more new customers excited by new tools and ever-improved data to support their investment decisions.
“We want to make sure we’re staying true to our mission to provide the best access to the US markets that we can,” says Silver.
Stake’s core platform remains free, save for a nominal charge for FX fund transfers, and gives users unlimited commission-free trades, advanced (limit and stop) order types, live market data, real-time execution and fractional shares, among other features. Stake is also currently free-trialling a premium service, Stake Black, due to go live for $9/month in January 2021, which provides more sophisticated features, such as analysts’ ratings and price targets.
Stake Black demonstrates the platform’s commitment to continuous enhancement of both technology and data for all users, says Silver.
“For example, we’ve recently released not only price targets and analyst ratings, but also full financial data – P&L, balance sheet, cashflow – for customers, because they were saying ‘it’s great that I’ve got access to all these companies, but I just don’t know which to buy’.
“We can provide the level of features and functionality for the people who want more sophisticated tools to be able to get into the US market. We can offer that, with the quality of the UX that you’d expect from a new age broker,” says Silver.
“There are a number of neobrokers that are, sort of, add-on features to existing products, they may not necessarily understand the trading product as well as we do – we’re just US stocks, so we’re specialised – and they may be a bit more clunky on the UX. They’re not necessarily fit for purpose for a lot of the new entrants into the market.”
And there’s another aspect to this mission. While the investments made by the new market player that Stake can create might be tiny compared to institutional and high net worth individuals using conventional brokers and wealth managers, they can nevertheless, by virtue of their numbers, have an important impact on the economy.
There’s evidence to suggest they might even be more stable traders during a time where investments are shed rapidly by large net wealth market players as the pandemic continues to play out.
With Stake’s sights set on expanding further across Europe, many more ‘ordinary Joes’ will be given the opportunity and means to indulge their curiosity in US listings; and, with interest rates tanking, many more disillusioned savers might decide it’s time to seize that chance.
“People are looking at ways to build their independence,” says Silver, “be that financial independence or lifestyle independence – not being beholden to big companies, big businesses.
“I think that’s why people have been so attracted to the markets in the last few months. They see it as a great way to make their money work harder for them.” A great way to get a Stake in their future.