The UK Online Retail Brokerage Market: Market Sizing and the Digital Channel

by Ashley Globerman, November 28, 2014
EMEA

Abstract

The self-directed brokerage market in the UK continues to evolve in the post-financial crisis world. Investors increasingly demand transparency, competitive pricing, greater control over their investments, and multichannel account accessibility, while regulators impose stringent legislation with the intent to protect investors.

Despite a challenging and volatile environment over the past several years, the self-directed market has shown moderate growth. In an effort to retain and attract retail investors, online brokerage firms continue to improve the client experience by enhancing trading functionalities and platforms, offering multichannel account access, deepening their asset class lineup, and developing innovative, tech-driven tools and solutions.

The UK brokerage market is fragmented, with market entrants and “digital disruptors,” such as digital online advice and social trading firms, which are challenging traditional brokerage firms, while nontraditional brokerage firms have expanded into the space.

In this report, Celent aims to provide an overview of the current UK online retail brokerage market with particular attention to digital strategy developments among firms serving the self-directed retail investor. Celent will endeavor to:

  • Segment the UK brokerage firms based on their client type.
  • Identify recent developments and trends to the industry.
  • Categorize retail investor product preferences.
  • Provide a breakdown of the various customer investor groups.
  • Size the retail investor market by approximating the current and future self-directed investor population and next generation of investors.
  • Identify the major market players and types of firms.
  • Highlight developments in firms’ digital strategies, including the online, social, and mobile channels.
  • Conclude with a prospective look at the future of the online brokerage industry, the growth of the various retail investor categories, and how online brokerages can differentiate themselves in the marketplace.

“In order to attract and retain clients, particularly NextGen investors, online brokerage firms should focus on building a robust digital strategy,” comments Ashley Globerman, an analyst with Celent’s Wealth Management practice and author of the report. “With the proliferation of the Internet, information and education, social media, and the affordability of smartphones, clients’ expectations are changing. As such, the enhancement of online trading platforms, mobile apps, and social media presence are critical features to develop in this fragmented market. For example, we are seeing the addition of social features and hybrid services, both DIY and advisor-led, among traditional brokerage firms.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Online Brokerage Industry Overview

3

 

Investor Classifications and Preferences

3

 

Online Brokerage Firm Taxonomy

3

 

Developments and Trends

4

Client Segmentation

8

 

Product Preference and Trading Behavior

8

 

Sizing the Market

9

Major Market Players

13

 

Types of Firms

13

 

Key Players

13

 

Digital Strategy Development

13

Looking Forward

21

Leveraging Celent’s Expertise

23

 

Support for Financial Institutions

23

 

Support for Vendors

23

Related Celent Research

24

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