Kehrer-LIMRA’s Study Reveals How Bank Brokerages Leverage Self-Directed Investing to Earn Higher Profits

It is no secret that investors want more control over their options to invest and this trend has been growing at an exponential rate. Banks are constantly exposed to an increasingly competitive business environment and challenged to broaden their client base as well as retain and grow their existing client relationships. As technology plays a major role in today’s financial markets, online-investing becomes an essential component of banking services to generate more revenue.

We’ve recently partnered with Kehrer-LIMRA to host a Webinar to discuss the compelling results of a survey focused on the bank brokerage self-directed channel. According to the findings, bank brokerage firms that provide customers with an online investing option contribute 13% more profit to the retail bank than those that have no self-directed investment channel, and had a revenue per household that is 16% higher. Through the research it was clear that the average revenue generated by an online trading account per year indicates the significance and profitability of the self-directed investing channel, considering the fact that these accounts require little or no service, and are a low cost delivery channel for the bank. Of the banks that were queried in the survey, 77% already offered online brokerage services, 4% were in the planning stages and 19% had no current plans to offer online services.

Over 80% of the bank executives surveyed said client segmentation has become an increasingly important strategy at their institution. Incorporating online investing into the existing spectrum of services allows banks to benefit from the generational wealth transfer by attracting the younger generations who are accustomed to conducting their lives with a distinct online focus. This new era of investors is mostly in their prime earning years and consequently a critical age group for banks to build or retain client relationships with in order to grow into a dominant force in financial services in the future. Improving the online investment services is crucial for banks to acquire a greater share of assets.

For detailed discussion of the significance and benefits of online investment channel, listen to a recording of our recent Webinar, The Value of the Self-Directed Investing Channel in the Bank Brokerage Industry, and let us know what you think!


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