Like the majority of established industries, the exponential move towards digitisation has changed the face of financial markets. South Africa is certainly no stranger to this evolutionary step in the way people transact, trade and manage money. The implications this has had in terms of accessibility are profound and far-reaching – with smarter, faster digital tools at their disposal, more South Africans can participate in financial markets and make a valuable contribution to economic growth.
SA’s burgeoning financial tech landscape
This is according to Roger Eskinazi, Managing Partner at Tickmill, who says that South Africa is known for having one of the most advanced banking sectors in the world. This, as he explains, is a reflection of the sophistication of our regulatory oversight and global rankings, but also of the cutting-edge technology behind digital and mobile banking.
In addition, the country is also home to a number of ground-breaking Fintechs whose primary objective is providing viable solutions to improving financial inclusion. “South Africa is a hotbed of innovation, and that innovation is the key to unlocking many more opportunities for players and stakeholders to develop financial services solutions that can cater to the needs of an evolving populace,” he says.
According to Statista the local digital investment market alone is projected to reach over $7.5 million in 2024, with total transaction value showing an annual growth rate of almost 6%. The past decade has also seen a proliferation of digital brokerage firms – now referred to as ‘neobrokers,’ which operate as online trading platforms, complemented in some cases, by advisory services.
Trading gets an AI supercharge
One of the most evident trends in the financial markets environment is the increasing influence of artificial intelligence (AI) and its impact on how traders make investment decisions. AI stock trading, also known as algorithmic trading relies on AI’s ability to analyse vast datasets in order to identify market trends, understand complex patterns and build trading strategies. This technology is particularly effective in helping traders safeguard themselves against making impulsive decisions based on human emotions like fear and greed.
“In the past, this level of advanced trading was only available to a select few with extensive coding experience. Generative AI has changed the status quo. Now, using tools like Tickmill’s Capitalise.ai, traders can create, test, and automate trading scenarios by completing actions as simple as typing a prompt. This technology is an effective supplement to human experience and is one of the best ways for newcomers to enter the market and save time and resources in the process,” says Eskinazi.
Blockchain powers greater uptake of digital assets
Another key area in which digital transformation has made a massive impact is the emergence of digital assets such as cryptocurrencies. The advent of Bitcoin near the end of 2009 was somewhat mystified and inaccessible to the masses – a very limited number of investors were able to reap the rewards of being early adopters. Now, more than a decade later, cryptocurrencies and other digital assets like non-fungible tokens, Stablecoins and digital commodities have entered the mainstream investment mix.
Blockchain technology, which underpins these digital assets, offers a decentralized and transparent framework for transactions – an innovation that is set to revolutionise financial markets. In South Africa, while the trade of tokens and participation in decentralized markets is arguably still in its infancy, the trade of cryptocurrencies has seen significant uptake.
To this point, research by the Financial Sector Conduct Authority has found that at least 5.8 million South Africans – nearly 10% of the population now own crypto assets. With efforts being made to better regulate the trade of cryptocurrency, higher levels of security will undoubtedly attract more digital investors in the years to come.
Trading goes social
With technology driving wider integration in terms of connecting traders to each other, social trading has also entered the arena as a new and improved way of emulating the skills and expertise of experienced online investors. Also known as ‘copy trading,’ this allows traders to be copied or to copy a successful trader in exchange for a performance fee or percentage of the profits generated.
By leveraging the expertise of seasoned traders, novice and intermediate traders can accelerate their learning curve and potentially improve their trading outcomes. This collaborative approach not only enhances individual trading performance but also fosters a vibrant and supportive trading community.
“We’ve bought into the trend significantly as a platform, by allowing any Tickmill account holder to replicate the trades of other investors. Becoming a successful trader takes time, knowledge, and experience. Why wait if you can cut the line and reap the benefits without delay? Social trading also allows Tickmill users to become strategy providers and earn more on top of their own trading rewards with no extra effort. It’s a win-win scenario.
We see social trading as a transformative development in the trading world, one that can democratize access to advanced trading strategies and level the playing field for all investors. As more traders participate and share their strategies, the collective knowledge base will grow, reaping benefits for everyone involved,” Eskinazi concludes.
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