In what they have described as a “competitive environment” created by the entry of online stockbroker Stake into Australia, local broker SelfWealth (ASX: SWF) appears to be holding the US fintech giant at bay, reporting increases to their revenue and customer trading accounts.
For the Quarter ending 31 December 2021, SelfWealth reported $5.07 million in operating revenue which was a slight decline from the $5.50 million reported in the September quarter but in line with industry standards given the reduction in online trading activity through the month of December. The revenue was backed by a 9.5% increase in active trades on the online platform over the three months to 117,674.
The most notable increase came in the value of investor portfolios on SelfWealth which increased from $6.82 billion in September to $7.97 billion in December. That latter figure also represented an 85% increase on the previous year as SelfWealth continued to increase its market share of the large market of retail investors in Australia that want to trade online with low cost brokerage.
“We are very pleased to see that our market share growth over the past six months has been confirmed by the independent Investment Trends report for July to December 20212, in a competitive market environment, showing our strengthened position as the fourth largest wealth creation platform in Australia,” said SelfWealth Managing Director, Cath Whitaker.
“Our team is committed to building a sustainable wealth creation platform with diversified revenues and we are focused on strategic initiatives to attract and retain retail investors, including new education content, consumer behaviour analytics and improved user experience.”
The increase in their customer base comes at a unique time in the Australian share trading platform landscape with US-based online broker Stake having launched in Australia in December 2021.
Like SelfWealth, Stake offers investors a platform where they can trade on their own unique Holder Identification Number (HIN), unlike competitors Superhero or Interactive Brokers. As part of their launch initiatives, Stake offers free brokerage to investors throughout December before introducing their low cost model at $3 per trade.
With Stake having also created functionality for investors to transfer their entire portfolios over to Stake, SelfWealth countered this by offering their own free brokerage on Exchange Traded Funds (ETFs).
Further attempting to establish themselves as the premier online broking platform, SelfWealth entered into a Heads of Agreement with cryptocurrency trading platform BTC Markets in response to overwhelming demand from investors to add cryptocurrencies to their portfolios.
In doing so, SelfWealth is aiming to be the first Australian-based online platform to combine direct Australian equities, US equities and cryptocurrency in a single account on the one wealth creation platform.
BTC Markets is Australia’s largest and most liquid cryptocurrency exchange with design and development of their market trading integration into the SelfWealth platform already underway.
“SelfWealth is excited to be working with BTC Markets, an organisation that is known for its professionalism, innovation and deep commitment to the Australian crypto industry. We remain focused on building out a premier wealth creation platform that retail investors can trust,” said Whitaker.
While all key metrics to SelfWealth’s performance have increased, the Company’s discounted brokerage in the hugely competitive environment saw net cash outflows of $2.4 million for the December quarter which made up 31% of their cash outflows in calendar year 2021.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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