Business

Transforming the Online Experience for Young Investors

Published

4 months ago

July 26, 2023

Thought Leadership by Ed Nicholson, Brand Experience Director at Organic

In this rapidly evolving digital age, investment firms – particularly those run on old-school principles and methods – must ensure their online presence is optimised to appeal to the next generation of investors.

With the rise of digital platforms and changing consumer expectations, cultivating a strong digital presence is crucial. Our expectations of brands and the experiences they offer are shaped by the best-in-class interactions we encounter daily. Giants like Google, Netflix, and Spotify have set the bar high, providing us with quick, effortless, and tailored experiences.

Young investors have grown up using digital products. Online or app-first services aren’t new or innovative to them – they’re the norm. This shift in consumer expectations presents a challenge for investment firms. While previous generations may have been more willing to accept clunky, slow or badly-designed websites or digital experiences (as the early websites that introduced them to online services weren’t the slick operations we see today), the new breed of investors has grown up with seamless digital interactions.

This younger demographic demands a flawless digital experience – anything less than that, and they won’t stick around and instead find another brand that meets their needs.

They want it all, and they want it now

The need to target younger generations is increasingly critical for investment firms. Without wanting to be morbid, ageing client bases won’t be around forever, and a new wave of high-net-worth individuals are the future. Many of these have accumulated wealth through non-traditional means, and the way they engage with investment firms is different, and thoroughly rooted in modern expectations.

An older generation of consultants might struggle to communicate effectively with these digital native, newly wealthy people. Phone ads or placements in magazines are unlikely to reach them, especially as digital circulation of magazines is now overtaking print. Global print circulation figures were down 14% between 2021 and 2022, while digital figures looked much more promising – current affairs and finance bible The Economist, for example, sold over 1 million digital editions globally. There are countless stats and studies on the rise of digital formats; the proof that you need to embrace them really is in the numbers.

Gen Z in particular is unlikely to go to traditional sources first for news, or even investment tips and tricks – studies show that in several countries, this demographic goes to Instagram, TikTok or messaging apps first for news. Gen Z wants to be well-informed about products they’re interested in before buying, and expect this information to be accessible any time they want it. To cater to the new generation, investment firms must create personalised online experiences that align with their specific needs and preferences.

Are we there yet? Simplifying the journey

Young investors want easy access to relevant information and seamless communication channels. Ask yourself: can they call you directly from your website or access a phone number? Is there a live chat function? Are those experiences seamlessly integrated with your content?

Quick and simple user interface and user experience (UX and UI) design will not only keep young customers happy, but it’ll make them more likely to return to your brand or recommend it to their peers. As well as making navigation simple, the quality of the content is key, too. Keep would-be customers informed every step of the way: by consistently providing relevant and useful content that answers any questions investors might have as they browse a site or app, investment firms can position themselves as thought leaders with an interest in, and understanding of, customers’ needs, queries and beliefs.

It’s essential for investment firms to ensure consistency across all digital touchpoints, too, whether that’s their website or app, or off-platform, such as in Google search results or social media. The interactions and tone of voice should remain consistent. It’s all very well investing heavily in a well-designed and written website, but if the imagery used doesn’t fit, or the tone of paid ads doesn’t match, users will get a negative and fragmented perception of the brand.

Invest in success

Identifying digital pain points effectively can sometimes be held back by impatience and desire for efficiency. At Organic, we’ve seen clients want to initiate projects quickly and without the requisite planning and budget, which can create challenges when conducting in-depth research. We recently worked with investment management brand Waverton to align the firm’s online activity with a refreshed visual identity, alongside establishing a new strategic vision for its digital experience to cater to existing and prospective clients. With this in mind, my biggest piece of advice is to be willing to conduct in-depth research, including customer interviews, before commencing any projects to improve your digital offering, as this will give you a much wider picture of what’s needed. That means willingness to devote budget to this, too.

When time and budget are limited, there are still things you can do. We have an alternative, more efficient – but less in-depth – method, where we make quick changes and improvements to a website based on analytics data, and look into ongoing issues while it’s live. The problem with that, though, is that solely relying on analytics may not provide a complete understanding of why certain situations or issues arise. The numbers will show you that people are dropping off your website at a certain page, but not why they’re doing it. That’s why I recommend supplementing analytics with techniques like heat mapping and customer interviews to gain deeper insights into user behaviour and pain points.

In summary, investment firms must embrace the digital age by reimagining and modernising their online experiences. It’s vital to remember that quick, easy and intuitive digital products are now the baseline expectation, not a perk. Your content and UX should work in harmony, your off-platform presence needs to not be neglected, and you should devote time into researching Gen Z consumer behaviour to tap into what really makes this demographic tick. There is a new generation of investors out there – you just need to know how to win them over.

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Revolutionizing Risk: Innovative Derivatives to Support the Evolution of Commercial Space

Published

1 day ago

December 2, 2023

admin

By Grant Gryska, Co-Founder and Director of Markets at Allocation.Space

The space economy continues to expand rapidly, crossing $500bn in revenue in 2022, 78% of which came from the commercial sector[1]. Major developments like the successful test launch of SpaceX’s massive Starship are set to radically change the cost of getting mass to orbit, unlocking new possibilities for business in space.

This growing market presents outsized opportunities for investors, insurers, and businesses. But, as enterprises extend their reach beyond Earth’s atmosphere, risk management tools must evolve to meet the new and unique challenges they face. A new generation of derivative instruments is emerging to support the commercial space sector while complementing traditional insurance models.

A Paradigm Shift in Risk Management

Traditionally, space ventures were funded by governments and international space agencies — institutions that were able to absorb risk and ignore bottom-line concerns. The arrival of private space companies such as SpaceX, Vast, and Blue Origin represents a material shift in the trajectory of commercial space. National interest is no longer enough; space ventures must also turn a profit, which means managing risk. These enterprises are pushing the boundaries of what is possible, requiring a comparable evolution in financial tools to support their endeavors.

Grant Gryska

We’re now seeing a new generation of companies building platforms to host derivatives that enable enhanced risk management for the space industry. By hosting these products on a Swap Execution Facility (SEF), the aim is to bring pricing transparency and efficiency to the sector via a centralized venue. Unlike traditional insurance, which often relies on predefined policies and premiums designed to mitigate specific critical loss, swap contracts do not require proof of any actual loss or attribution, broadening the universe of potential participants in this growing market.

Derivative Instruments for Commercial Space

Derivative instruments tailored for the commercial space sector will help mitigate risks and enhance financial flexibility as the barriers to entry come down and competition increases.

Space Weather Derivatives (SWDs): With satellite anomalies demonstrating a 74% correlation[2] with geomagnetic disturbances caused by the solar wind, these products will become invaluable in managing revenue loss due to these disruptions. SWDs will ensure a smoother execution of space missions and terrestrial applications such as power grid management.
Space Derivative Contracts (SDCs): SDCs allow investors and companies to hedge against price fluctuations in space-related assets. Whether it’s fuel, space-based resources, or payload rate indexes across launch platforms and locations, these products provide a means to lock in prices, offering stability in an otherwise volatile market.
Space Options (SOs): Like traditional financial options, SOs provide the right, but not the obligation, to buy or sell a space asset at a predetermined price and time. This allows investors to capitalize on favorable market conditions while limiting downside risk.
Space Risk Swaps (SRS): SRSs enable entities to exchange or transfer specific risks associated with space activities. For instance, a satellite operator concerned about launch delay or orbital debris may enter an SRS with a risk-taking party, effectively transferring the risk to them. These products diversify risk and encourage collaboration among industry players providing complementary services like debris mitigation.

Complementing Traditional Insurance: Bridging the Coverage Gap

While traditional insurance remains a fundamental component of risk management, derivative instruments offer a more nuanced approach targeting the risks to revenue. These products provide a level of risk granularity that traditional insurance may lack or be unable to cover economically, which has left 99% of LEO (Low Earth Orbit), and 73% of MEO (Medium Earth Orbit) and GEO (Geostationary Orbit) satellites uninsured on orbit as of 2022[3]. This is crucial in an industry where risks to launch platforms, satellite technologies, and commercial objectives can be highly specific and variable.

The Future of Space and Derivative Instruments

There’s a growing cluster of companies looking to transform the financial products and venues supporting the commercialization of space. The derivative instruments being developed with the help of space industry players will provide a forward-looking and adaptive approach to risk management for space, complementing traditional insurance models.

As the commercial space sector continues its trajectory beyond Earth, these innovative financial tools will play a pivotal role in ensuring a robust and resilient financial ecosystem for companies participating in the space economy.

[1] https://www.spacefoundation.org/2023/07/25/the-space-report-2023-q2/

[2] Choi, H. S., J. Lee, K. S. Cho, Y. S. Kwak et al., 2011, Analysis of GEO spacecraft
anomalies: Space Weather relationships, Space Weather, 9, S06001.

[3] https://spacenews.com/connecting-the-dots-space-insurers-toast-another-profitable-year

Business

2024 Payments Predictions

Published

2 days ago

December 1, 2023

admin

Alan Irwin, Vice President of Product & Solutions Europe, Global Payments:

Open banking in 2024 will be all about the consumer

“2023 has been a huge year for open banking adoption, surging 68.2% from the previous year to hit 4.2 million users in the UK in July. Open banking enables consumers to provide third-party providers (TPPs) with secure access to their payments account, meaning that payments can be made through these TTPs directly from their payments account and without the need for cards.

“With more people using open banking for payments, in 2024 consumer expectations of open banking are likely to increase dramatically. Consumers will demand higher levels of speed, convenience, and security around open banking as a payment method. As a result, there will be a renewed focus on the availability and performance of APIs and user interfaces. Without improving these features, TTPs will see growth in open banking payments stagnate and even struggle to compete with digital wallets and standard cards.

“2024 will also see a stronger emphasis placed on consumer protection from fraud and scammers. With £239.2 million lost to authorised push payments (APP) fraud in the first six months of 2023, security is front of mind for businesses and their customer bases. A key differentiator for open banking and card payments is the liability protection offered by cards through the disputes and chargeback processes. Merchants and consumers alike want the power to protect themselves with tools and processes to limit financial exposure. As such, to grow in the coming year, TTPs will need to develop and implement enhanced risk and fraud prevention tools to help drive confidence in the payment channel and mitigate concerns around exposure.”

Competition between old and new banks will intensify around convenience

“Growth in consumers’ desire for a financial ‘super app’ experience will put a great deal of pressure on traditional financial institutions and increase competition between neobanks and legacy banks in 2024. A financial ‘super app’ is a single mobile application that can be used to manage all aspects of your financial life, including services that range across savings, investments, mortgages, and payments, for example.

“Neobanks, such as Revolut, are creeping into ‘super app’ territory: providing a range of services, from shopping discounts and savings pockets to instant currency conversions and stock investing, all on a single mobile application. So far, these developments are almost exclusively in the consumer banking space. However, in 2024 we will see the neobanks push their payments offerings further up the value chain into the B2B world, challenging traditional banks on another front.”

Ecommerce checkout enhancements

“In 2024, payments providers and their clients will place a fresh emphasis on customer experience, as demand for convenient and slick payment processes continues to increase. Currently, 69.57% of online shopping carts are abandoned and less than one fifth (17%) of retail, leisure and hospitality transactions are made through digital wallets, showing that much more needs to be done to offer smoother payment infrastructure online and in-store. As such, in 2024 businesses will focus on customer experience as a means of increasing customer loyalty and slashing cart abandonment rates in the process. Moving away from slow, clunky payment experiences to offer customers the ability to pay for something with a few clicks through biometrics, which allow customers to pay with a simple face or fingerprint scan, and digital wallets, which store customer payment information, is the primary method that businesses should be using as we approach the new year to tackle this issue.”

Data Storage and Keeping Customers On-Site

“Providing a top-quality payments experience will go hand-in-hand with ensuring that consumers feel safe at the checkout, especially with soaring cybercrime. In 2024 we’re likely to see more use of card data storage and tokenisation to further reduce cart abandonment rates as they allow consumers to store their card details for future use, making their next purchase at the ecommerce store much faster. Network tokens in particular, which are tokenised payment details saved for a specific card and merchant pair, drive higher approval rates for merchants and offer a more secure form of payment than raw card data entry. In addition to this, continuously updating customers’ card data further reduces friction in the checkout and drives better cart conversion.

“What’s more, customers are also put off payments when they are redirected to another (3rd party) site to complete it, as it is unfamiliar to the rest of the checkout process, often doesn’t carry the merchant brand and thus deemed insecure. Therefore, reducing site changes as much as possible and using clear branding and UX to ensure customers are aware that they’re still on this same site is key to instilling a sense of security. Similarly, real-time data validation built into the payment form can prevent bad data from being entered in the first place, such as invalid PAN, expiry date, or security code, as well as keeping out bad actors from spamming through card data en masse.”