Will e-commerce continue to help the finance sector grow?

Posted by Sam on March 28, 2018

The e-commerce explosion has been huge and far-reaching and shows no signs of slowing down. While the big players like Amazon continue to refine their model and move into new markets, there's still plenty of room for smaller online shopping and service ventures, particularly in relatively under-exploited markets like the finance sector.

The buying habits of millennials and post-millennials reflect the fact that they have grown up with the internet as a natural part of daily life. Shopping online is second nature to those generations, and while high street shops will always be there for the essential basics of everyday life, increasingly more specialist products will be purchased online. Personal financial products are an excellent example.

The advantages of e-commerce over regular shopping are clear. One is convenience. You can buy and sell from the comfort and security of your own home at any time of day and night. The matter of timing is important in the financial sector. When trading on the global stock market e-commerce has obvious benefits over calling one's broker on the phone or making a personal visit during office hours only.

Taking control

The opportunities of being able to undertake research, shop around and carefully consider one’s options are also vital when buying financial products. Insurance, investments, pensions and so forth are matters to be taken seriously. It's far from ideal to have to choose a provider simply because they are the only ones with an office in your local town or because you've been beaten down or bamboozled by the sales pitch of a representative. E-commerce puts you in control of your financial decisions, and as such it is sure to become the default way of doing business regarding personal financial management.

That is already the case in business to business (B2B) e-commerce. B2B e-commerce as a whole dwarfs business to customer ecommerce by over $2 trillion, and it is certainly the preferred medium for financial services provided to small, medium, large and multinational enterprises.

Natural growth

In a sense, this is a natural evolution. Finance, in the form of stocks, shares or money, is a virtual representation of real-world value. It moves around as digital information, and so using a B2B e-commerce platform is a natural way for businesses to manage their financial affairs.

The financial industry today is based on information and communications technology for almost every process, product and channel. Indeed, the finance sector was among the first to realise the potential of IT, from the 1960s onwards. This is an area of business that is driven by new technology where the commodity is mainly information, the building block of today's digital world.

The London based independent financial services company Shard Capital offers a full range of brokering, asset management and corporate capital services online. It also provides a trading platform in the form of Shard Go, allowing users to manage their entire portfolio from a single account via a variety of devices. The utilisation of digital platforms to access services, particularly mobile, is a key driver of the expansion of financial services, from simple online banking to forex trading.

Expanding market

There is still a vast global market for e-commerce that remains mostly untapped, particularly in the Asia Pacific region. China is by far the world's largest e-commerce market, with almost twice the value of the US. Yet there is still room for expansion in the country and in neighbouring territories, as a growing middle class comes steadily online. Because finance is by nature global, services in these areas are already much sought after e-commerce options, and those countries will increasingly act as providers as well as consumers.

Challenges and opportunities

The finance sector will face the same challenges as other players in the e-commerce market, especially as competition increases. Attractive and intuitive website design will be necessary to stand out from the crowd, but financial providers should remember that their customers want clear information and functionality above flashy gimmicks.

Finally, the increasing popularity of e-commerce has brought with it a wide range of digital payment options, from e-wallets to bitcoin. One effect of this is to make ordinary consumers more aware of the changeable and digital nature of money. As financial services become more accessible online, so people are more inclined to use them to take control of their money. Considering that we may be living in the last days of cash, with digital payments fast becoming the preferred option, it's unsurprising that the financial sector is confidently riding the e-commerce wave - one that seems in no danger of breaking for some time to come.

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