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Investment Trends

Too Many Brokerages for Investors? What Fintechs Can Learn about How Americans Invest

The meteoric rise of fintech has had its benefits; no more are the days of paying for trades, bank accounts, or loan origination. The sector has been slowly – but surely – sending penny-pinching and poor user experiences to the grave.

However, solving finance problems with tech has created a handful of new tech-specific problems. People now have to keep track of many disparate and siloed financial applications – their bank accounts, brokerage accounts, crypto exchanges, alternatives, loans, credit cards, and insurance products all exist without awareness of each other.

In a poll conducted by the American Association of Individual Investors, 69% of the 2,464 individual investors polled said that they had at least two brokerage accounts – 13% of the sample reported having four or five accounts; 6% had more than five.

The 2019 poll predates the pandemic, an unprecedented time for brokerage companies such as Robinhood, Public.com, WeBull, and other competitors. Many of these names beefed up their marketing budgets, paying customers between $8 and $50 just to bring them into the fold – which solidifies the case that many more investors, especially new ones, have multiple brokerage accounts.

And that’s just brokerage accounts – that doesn’t even consider the millions of new crypto accounts, checking and savings accounts at neobanks, and accounts opened on alternatives platforms.

In truth, tracking these many types of accounts would require enormous patience – and probably more information than you got from your high school personal finance class. Americans awash in financial accounts could track all their accounts in a spreadsheet, their notes app, or any of the many budgeting apps which have also bubbled up during the so-called fintech revolution…

But what if, instead, they could lean back on your tech stack? What if they could simply connect their 401(K), 529, qualified and nonqualified brokerage accounts, checking and savings, alternatives, crypto wallets and exchanges, and everything that lies in between to your product?

At Front, we’ve built a sophisticated API that can help the next generation of fintechs do just that.

Our team did it when we launched the consumer Front app in 2020, allowing users to connect their accounts to track in our app. In the years since, we’ve added the functionality for investors to get rich insights about their portfolios, make trades from within the Front app, and make other smart financial decisions all from the comfort of our product. 

We’re now providing that deep offering to fintechs looking to offer the next generation of investors an alternative to the archaic conventions of finance past. It’s an opportunity for fintechs to help their customers and users leave behind bad integrations,  annoying spreadsheets, heady budgeting apps, and the like.

Instead, using the Front API, you can help investors see the big picture of their finances – and then to help them make more informed decisions. CeFi and DeFi firms, lenders, neobanks, broker-dealers, and other fintechs can all benefit from the ability to process and display portfolio data on their users.

If you’re interested in how Front can help you help your customers with our robust API functionality, you can get a glimpse of ways our product is being used right now. Front can provide you with the tools you need to create simple and convenient solutions for your users.

Start connecting with Front’s APIs now.

 

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