Digital engagement practices: a trading apps experiment


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Published
Jun 20th '24
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Financial Conduct Authority (FCA) research finds that digital engagement practices (DEPs*) used by trading apps, such as gamification, can increase the trading frequency and risk taking of consumers. 

 

In an online experiment with over 9,000 consumers, we tested 4 digital engagement practices (DEPs) looking at their effect on trading frequency and investment risk. The DEPs we looked at were:

 

  • flashing prices
  • push notifications
  • trader leaderboard
  • points & prize draw

 

Key finding is that DEPs can lead to changes in both trading and frequency and investment risk. The FCA also found some evidence that DEPs can have a larger effect on:

 

  • those with lower financial literacy
  • women
  • participants aged between 18-34

 

This suggests that firms and regulators should continue to closely scrutinise the effect of trading app design features on consumer investment decisions, especially in light of the FCA’s Consumer Duty.

 

Source : FCA

 

 

Authors

John Gathergood, Cameron Gilchrist, Lucy Hayes, Deanna Karapetyan, Stephen O’Neill & Neil Stewart.

 

Disclaimer

Research notes contribute to FCA work by providing rigorous research results and stimulating debate. While they may not necessarily represent the position of the FCA, they are one source of evidence we may use to discharge our functions and inform our views. The FCA strive to ensure research outputs are accurate, through checks including independent referee reports, but the nature of such research and choice of research methods is a matter for the authors using their expert judgement. To the extent that research notes contain any errors or omissions, they should be attributed to the individual authors, rather than the FCA.

 

*Digital engagement practices (DEPs), a term coined by the U.S. Securities and Exchange Commission, are “the tools including behavioural techniques, differential marketing, gamification, design elements or design features that intentionally or unintentionally engage retail investors on digital platforms” (SEC, 2021). 

 

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