Digital Investment Platforms Set to Stay Despite Concerns

Lower barriers to entry part of appeal even amid some doubts on their sustainability

- Chor Khieng Yuit

Faith in digital investment platforms took a knock in March when investors rushed to pull their cash out of Chocolate Finance, but these platforms are here to stay, although not all of them will prevail.

Their appeal is easy to see, as Professor Jan Ondrus from Essec Business School's Asia-Pacific campus noted.

Digital finance platforms have "democratised investments", as they open up options to individuals who cannot access bank products because they do not meet certain net-worth requirements.

"The affluent people will have private bankers proposing products to them for their investments," added Prof Ondrus, but "many people in Singapore do not have this kind of dedicated personal service".

"To some extent, these digital platforms provide some kind of personal advisory service."

Their relatively recent arrival on the financial scene and a still lingering uncertainty about them could well have contributed to the drama around Chocolate Finance.

Investors lost confidence in the company and rushed to withdraw their cash, sparking something akin to a "bank run", although Chocolate Finance is a fund management company.

The company paused instant withdrawals on March 10 after receiving "an unusually high volume of withdrawal requests".

The ship was stabilised soon after and now all withdrawals are processed in three to six business days, according to the company's website.

Chocolate Finance is just one of the digital investment platforms that have sprouted here over the past decade.

Others include Syfe, StashAway and Endowus.

The fact that using these services can be far easier than signing up with a bank has made them especially appealing to young investors.