The Customer Effect

How local culture is shaping retail investment platforms globally

  • Retail investment apps may serve the same purpose, but no two are alike.
  • Depending on a country's culture and financial literacy, investment products are designed quite differently from another.

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How local culture is shaping retail investment platforms globally

In the year 2020, the U.S. stock market welcomed back the retail investor. While developments in investment attitudes and accessibility to the stock market had already set the stage for this shift, pandemic-era innovation in technology and developing profitable businesses out of servicing niche communities provided the final push. By the end of 2020, retail investors made up 20% of US equity trades, twice the total in 2019, according to internal estimates at Citadel Securities, U.S.’s biggest market maker.

“Over those last couple of years, we've seen this really incredible growth in retail investing, meaning non-professionals who are getting into and engaging with the stock market,” said John Shammas, head of technical sales at DriveWealth, at Tearsheet’s The Big Bang Theory Conference held in November. “This is actually occurring all over the world, and isn't just specific to the U.S.”

It’s rather easy to say that technology pushed individual investors into the market. However, the work that goes on in the back-end of developing these retail investment tools is anything but. There is no one-size-fits-all approach to serving individual investors, and creators need to design around different factors that concern them, like cultural sensitivities toward money, base investment knowledge, investment appetite, and aspirations. Different brands have entered the market targeting unique sets of target customers, building investment products that address their unique concerns. So, while most investing apps may serve the same purpose, no two apps are exactly the same.

DriveWealth is a New Jersey-based embedded investing platform -- its API-driven brokerage infrastructure helps brands create investment products around the world. Its technology powers firms like Flink, a Mexican neobank that offers U.S. fractional trading to local retail investors; Chipper Cash, an African financial platform that uses DriveWealth’s technology to enable retail investors in Nigeria, Uganda, and Ghana to buy fractional shares of U.S. stocks; and Digit, an American personal finance platform that offers managed investing and retirement products.

“What's really critical is that, as brands that look at globalizing investing, bringing investing to new audiences or taking investing from one region into another, we have to have this really deep understanding of how different cultures interact with financial products,” Shammas said. “Different factors like where somebody is located, or cultural differences, maybe how much money they have, really shape what they're expecting out of financial services products. And there are some really unique ways that apply to investing that perhaps don't apply when we look at a different aspect of financial services, like banking.”


Asian markets are an example of the way investment apps are designed differently with respect to the culture they are targeting. In the U.S., when an investor looks at a stock ticker, little triangles denote individual stocks’ performance over a certain period of time. Red denotes a fall in prices, while green indicates a rise. These colors, however, are not globally consistent. In much of Asia, red is considered a lucky color and a positive color. So, in markets like China, Japan, and Korea, one sees that red denotes a stock moving up, while green indicates it going down.

Having worked around the world, Shammas likes to organize geographies into three main buckets. In the first bucket, he puts developed economies with a sophisticated financial ecosystem, a mature investment appetite, and a variety of investment products available in the market, like the U.S. and the U.K. The second bucket is where he puts developed countries that may also have a sophisticated financial ecosystem, but have smaller markets, often due to population, like Australia and Singapore. The third bucket is where he puts developing countries, like India and China.

The U.S. and U.K. represent two countries that already have advanced access to investment opportunities, with a variety of investment products, in terms of quantity and quality. What’s driving innovation in these economies is the desire to make investing as frictionless and engaging as possible. As a result, embedded fintech offerings and gamification of investment products have gained popularity. Increasingly, consumers can make multiple financial activities from a single platform, and gamification has made the process more seamless and engaging.

Shammas explained that some factors that may not be as integral to fintech investment offerings in the U.S. are key considerations in other smaller, though sophisticated, markets. For example, trading costs are much higher in the Australian market, making certain investments cost-prohibitive. 

Another strong element in the Australian market is the demand for international exposure. An Australian Securities Exchange poll found that more than one in three young Australians were intending to buy international shares over the next 12 months.

“For example, when you look at a challenger, a newer entrant into the [Australian market], you'll see them often lead their products with two things: trading costs and international access. And these two things are really two factors that you won't see a US firm advertise very heavily anymore. It's very rare to see a US broker talk about commission costs because there's just this expectation that it's zero or very close to it. And, there really isn't much appetite for international shares either here in the US. So you see the same products in both markets, trading large international stocks, but presented in marketing materials very, very differently.”

Developing markets around the world, like India, Ghana, and Mexico, often have very different investor expectations, and the job for an investment platform can be drastically different. In these markets, factors like liquidity, the safety of assets, and investor education prove to be much more critical than the convenience or user experience of a platform to attract investors.

Of India’s 1.38 billion people, only about 3.7% invest in the stock market. According to the Securities Exchange Board of India, that’s because the mass perception of stock investing is akin to gambling. So, to drive adoption, Indian upstarts rely heavily on education.  

“In India, platforms have to educate customers on financial choices that aren't as risky as gambling. How to use these services in a way that is not just important for personal wealth building, but in certain circumstances, very critical to fighting local challenges, like inflation, which could be very different around the world,” said Shammas.

Ghana presents another specific cultural challenge, Shammas said. The challenge is a fear that if someone invests in a stock or fund today, they may never be able to trade out of the investment. The small size of the nation’s stock market limits active trading.

“The stock market in Ghana has about 37 companies that are publicly listed and traded. But on Thursday [4th November], only four of them ever exchanged hands. There are only four of those companies that one person bought and another person sold,” Shammas said.

The Ghanian market requires a solution to its liquidity problem through education about investing. Introducing investors to stocks with different risk profiles, and how that dictates their demand in the market is a common element in investing platforms catering to that market.

To develop an investment product is not as simple as developing a tool that allows people to do what they want with their money -- it needs to be more personalized. Insecurity around money is a global phenomenon, but what causes it in Australia could be drastically different from Ghana. Investing apps increasingly need to zoom in on their target audiences, learn their pain points, and help them tackle them if they wish to succeed.

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