As the lines between online gaming, gambling and trading become blurred, there is huge potential for untapped revenue. The risk for addiction is also immense.
Colorful digital flower bouquets, rising hot air balloons and flashing lights are all visuals we expect to see in online games like Candy Crush or on an online gambling app. Online trading apps however are increasingly looking the same.
When online trading went mainstream, traditional banks were in a mad rush to provide less complicated banking services with options to invest in stocks, funds or crypto-currencies.
Although most banks are more restricted in what they allow clients to invest in, they are also «very aware of the revenue they are missing out on,» Jan-Philip Schade, who gives lectures for St Gallen University’s innovation in finance program, tells finews.com over the phone. He is convinced that banks would give their retail clients more trading functions, including intraday trading, «if they had the technology, which allowed them to do so.»
Eye Candy
It is the younger audiences financial players have in mind with their new products: «The generation who has grown up on social media is particularly susceptible to the visuals on these apps» Christian Ingold, director of Radix Zurich, a prevention center for behavioral addictions, tells finews.com in an interview.
Ingold has a special focus on this group in his work making people aware of the dangers of gaming, gambling and increasingly, online trading. «This is the group we assume we will be seeing more of in the not too distant future, as soon as the first debts pile up,» he says.
Countervailing Force
People with market knowledge might have more of an understanding that you cannot influence the markets, whereas amateurs go about trading the same way as they would a sports bet, he says. «They are under the illusion that there is a countervailing force, that the next trade will make up for previous losses.»
But it’s not just amateurs who behave like this.
Let Sleeping Dogs Lie
After having treated several patients, including high-ranking professional traders with a pathological disorder between 2011 and 2015, Ingold approached four of Zurich's banks in 2016, offering them advice on how to address trading addiction among the banks’ staff. The reaction was muted.
The banks wanted to keep their problems within their human resources departments, or maybe it was a case of «wanting to let sleeping dogs lie,» Ingold says. «Banks have the difficult task of recruiting people who are not shy of taking risks, but who are also in control of themselves,» he adds.
Trades at Our Fingertips
«No matter how professional or experienced the banker is, an unexpected gain can represent a heavy psychological burden for the human condition,» he says. It can trigger a cycle, in which the trader asks himself «can I repeat that? From there, the pressure rises to have another go, take a bigger stake,» Ingold says.
As more people have the possibility to trade on their phones, Ingold says he wishes financial regulators would put the same emphasis on protecting online traders as casinos have on protecting players, such as using tools to monitor and flag behavior and levels of activity.
Not Aware
In a response to finews.com request about protection measures, IG Bank and Swissquote referred to the disclaimer clients click through when they open an account where a client confirms that he or she has enough financial knowledge to know what they are doing. Dukascopy and Saxo Bank did not respond by the time of publication.
While the Swiss State Secretariat for International Finance told finews.com that it was not aware of a gamification process among trading apps from authorized Swiss banks and brokers, it said it could not exclude that such products from companies registered abroad were available to Swiss citizens.
The following organizations offer help to people with behavioral addictions in Switzerland.
https://safer-gambling.ch/
https://www.winbackcontrol.ch/
https://www.spielsucht-radix.ch/
https://www.suchtschweiz.ch/
