The market for online stockbrokers targeting millennials with low fees and innovative technology will shortly see its most recent development as Dabbl, the UK’s first app-only stock broker gets set to launch within 6 weeks. Within the last couple of years, a new breed of app-only digital banks has appeared. Their target audience is the smartphone generation and the supposition, as a Guardian article puts it, that these consumers want ‘something that looks more like Netflix than NatWest.’ Minus the overheads of maintaining a network of branches and customer support call centres, these new app-only bank accounts are offering some of the best interest rates currently available on the market.
Dabbl’s co-founders Mark Ackred, Martin Slaney and global advertising agency Bartle Bogle Hegarty, are now attempting to take a similar approach to stock broking. Their hope is that Dabbl’s proprietary technology, which has been 2 years in the making, and ‘ground breaking’ fee structure will similarly shake up a service they believe has for too long been dominated by “lethargic stockbrokers catering to an old-fashioned, wealthy elite”.
Set to launch in 6 weeks, Dabbl is taking pre-registrations from those who wish to be among the first to be able to download the app. Rather than paying a dealing fee every time a share, or ETF (which will be added shortly following launch), is bought and sold, Dabbl users will be charged £1.49 per month to buy and sell as often as they wish. This compares very favourably to the £10 average per transaction that the UK’s top 5 stock brokers charge. The low fee is made achievable by the fact that Dabbl will execute buy and sell orders in bulk once a day at 15:00, rather than processing each client transaction individually.
The app also includes image recognition and search engine technology so if users come across a product or service they are impressed by it can be ascertained if an investable stock market-listed company behind it is behind it. This ties in nicely with the central pillar of ‘Sage of Omaha’ Warren Buffet’s investment strategy of ‘invest in what you know’.
Dabbl’s team believe that a generation have been put off from stock market investment by high fees and the elitist approach of traditional stockbrokers. Chief executive Mark Ackred commented:
“At Dabbl we’re on a crusade to remove the unfair barriers which have dissuaded a generation of everyday people from being able to buy shares themselves, and to educate a nation in the benefits. We want to make investing in shares, in the companies that people connect with every day, easy and accessible for all – a Fair Share revolution”.
The app has already seen over £1 million invested in its development with backers including Bestinvest founder John Spiers. However, in keeping with the philosophy of bringing the benefits of company ownership to the masses, Dabbl is opening up its first public fund-raising round, expected within the next 12-months, to the first 10,000 to download the app. These early adopters will be given an ‘exclusive’ option to invest in the company.
While the first app-only online stock broker in the UK, Dabbl joins a growing new wave of low and no fee brokers to enter the market in recent times. Trading 212 launched its no fee stockbroking platform over the summer and another company, Freetrade, are set to launch in the next couple of weeks. iDealing offers fee-free trading of certain Euronext stocks and over in the U.S., another fee free broker, Robinhood, has been making waves and can also be expected to launch in the UK sooner rather than later.
The new wave of super-low and low fee stockbrokers are taking a ‘freemium’ approach to revenue, similar to that of tech innovators in other markets, like Spotify and Skype. The strategy is to first achieve large numbers of users by offering a basic free service and hope that enough can then be upsold value-added services. In the case of online stockbrokers, these would be products such as ISAs, SIPPs and services such as live market data and research on listed companies.
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