There are a few particularly popular niches within the Australian fintech space, with online small business lenders to platforms allowing consumers to find and negotiate the right home loan particularly hot areas. Another is investment, with offerings popping up to target a breadth of consumers.
From the likes of Acorns, which is gathering up a user’s ‘loose change’ and investing it for them, through to Brickx allowing users to invest in property brick by brick, and Stockspot using AI to help better invest its customers’ money, the choice for the consumer is vast.
Adding another option to the mix is Sydney startup Stake. Founded by Matthew Leibowitz, Jon Abitz, and Daniel Silver, the platform wants to offer Australian investors easier and cheaper access to US stocks and exchange traded funds (ETFs) than previously available.
The idea was born out of Leibowitz’s time at US trading firm Optiver, where he saw a vast spread of product available to consumers at an affordable price.
“Australia is on the opposite end…limited product suite, hard to access, and expensive. It was obvious to me that Australians were getting a raw deal,” he explained.
Getting asked by friends where to invest, Leibowitz found there was nothing he really wanted to recommend; Stake is the result, with simplicity at its core.
“Equity markets have been a great source of wealth creation and a key component in economic and technological growth for centuries, but accessing them has been expensive, complicated, and full of conflict,” Leibowitz said.
As Leibowitz explained it, Stake works just like any other online shopping experience – “you can manage your investments as simply as buying a new pair of shoes,” he said.
“If you wanted to find an investment related to shoes, you would type ‘shoes’ into the searchbar, and out would come the shares like Nike, Foot Locker, and Steve Madden. If you wanted to invest in oil-related stocks, you type ‘oil’, then narrow down the search based on the share type or region of the company or fund, just like you would when playing around on Domain.com.au.”
Adding to the e-commerce experience, users can also see related shares after checking out a company, in the same way the ‘see what others bought with this’ message comes up on a product page on Amazon, while users can also buy others gift cards.
A Discovery bar also shows users curated opportunities based on what’s happening in the world or market, looking to help give users an understanding of the various factors driving market conditions, while users can also follow the portfolios of big-name investors like Warren Buffett or see what global traders are doing.
“It’s important for us that every person visiting or using Stake can become more educated when it comes to investing,” Leibowitz said.
Aside from education and e-commerce experience, the core to the platform’s appeal is to be its low costs. If placing an order for up to 300 shares, the cost will be US$5.99, with a further fee of 2c per share for the buying of any shares beyond 300.
The likes of CommSec, meanwhile, charge 0.31 percent of the value of a trade, while Westpac charges 0.65 percent of the value of a trade.
Of course, not everyone is making huge buys; as such, though Leibowitz said the platform is for “anyone who wants to manage their wealth better”, Stake is more focused on the market the cofounders themselves are in: the 30-45 year old professional who doesn’t want to go through a financial advisor.
“This market recognizes that investing is a vital part of wealth creation, they are returns-focused, digitally savvy and expect value above talk,” Leibowitz said.
The development of Stake has been supported by a number of partners, including Macquarie, which providers users with an Australian cash management account; OFX, powering its foreign exchange transfer service; and Sanlam Private Wealth, which also operates the investment service of fintech startup Stockspot, providing oversight on Stake’s compliance. Orders are executed through Stake’s US broker dealer, DriveWealth.
These partnerships have enabled Stake to automate the whole process, including the W-8BEN form non-US residents must fill out to have withholding tax deducted, which is handled by DriveWealth.
“We’ve built an internal and external API suite, which allows us to leverage the skills of our partners so we can focus on the user experience and know that there is full transparency over the money flows, ensuring that the customer’s assets are safe,” Leibowitz said.
There are currently over 3,000 US listed shares on Stake, with the startup keen to consider ASX listed stocks if it sees demand from users. It will also look to offer trust and self-managed super fund accounts down the track.
The Australian fintech space is hotter than ever, with investment a particularly strong space, however Leibowitz is confident in Stake’s product.
“Some would argue that the big four banks and their subsidiary brokers are competitors, but working with them to bring a better solution to market is actually something I encourage,” Leibowitz said.
“We have a great product and these banks have strong distribution; there can be significant wins for the Australian consumer if we work together. It could be a win, win.”
Image: Dan Silver, Matthew Leibowitz, Jon Abitz. Source: Supplied.
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