Would You Buy Shares On What's App or Facebook Messenger? Soon You Can

Fueling the all-too-human impulse to act before you think. JL

Aime Williams reports in the Financial Times:

A low-cost broker said it intended to launch a trading service on the messaging platform, enabling retail investors to give instructions to buy and sell shares through the app. Customers will be able to communicate directly via text message with a software program powered by artificial intelligence that can respond to human requests.
UK fund supermarket AJ Bell is looking to allow investors to trade through Facebook’s Messenger service, as it aims to broaden its appeal to millennials. The low-cost broker, which has £28bn of assets under administration, said it intended to launch a trading service on the messaging platform in the next three months, enabling retail investors to give instructions to buy and sell shares through the app.AJ Bell customers will be able to communicate directly via text message with a bot, a software program powered by artificial intelligence that can respond to human requests.
Tim Huckle, digital strategy director at AJ Bell, said that using the platform, which has more than 900m monthly users, would appeal to 18-30 year olds.
The company believes that it is the first to execute a trade using Facebook’s Messenger app. It is also working on upgrading its system to allow retail investors to buy and sell funds through the platform.
“We have created a secure authorisation framework between the Facebook Messenger platform and AJ Bell Youinvest,” said Mr Huckle, referring to the company’s consumer investment platform.
The move comes two months after Facebook opened up its AI tools to businesses in April, in the hope that companies would create bots to communicate with customers on the platform.
Mr Huckle said that he bought £500 of Facebook shares using his own account and has released a video documenting the transaction. It shows how investors could access their accounts through Messenger, request information including charts and prices on hundreds of different stocks, and request a quote — which they can then choose to accept or reject.
Following the transaction, they can view a summary including dealing charges and foreign exchange trading costs without leaving the Messenger app.
Before the service is opened to the public, however, the broker will also need to submit its bot to Facebook for approval, much like app developers must gain approval from Apple to appear in its app store.
Facebook declined to comment.
Distributing funds through social media platforms has long been an aspiration for the asset management industry.
A senior partner at a consultancy firm said that using Messenger to distribute funds would give “much more reach” to asset managers looking to push investment products to the next generation of investors.
“If this is successful then all platforms are going to start wanting to do this,” he said.
But he warned that making trading too easy could backfire. “We know that retail investors tend to overtrade and that they lose out because of transaction costs,” he said. “That would be something to watch out for.”
AJ Bell does not anticipate regulatory problems because it intends to use the tool to communicate with existing clients.
“Customers will sign up to the AJ Bell platform through the normal process and go through the normal regulatory requirements,” the company said. “Trading through Facebook is no different to trading through the website or through our mobile app from a regulatory perspective.”
The Financial Conduct Authority, the UK regulator which oversees brokers, declined to comment.
The new sales channel could also face questions over security. Mr Huckle said that the company had “added a further layer of security” by requiring a user to input their password and one-off PIN sent to the customer’s mobile phone but Messenger does not use end-to-end encryption.
David Marcus, the executive who heads Messenger, has previously said that bots had the potential to become a “new paradigm” which would create new companies, in the same way that apps, sensors and GPS services led to the rise of car-hailing apps such as Uber.
In April, Microsoft chief executive Satya Nadella said that the company was keen to develop new uses to chatbots, declaring “bots are the new apps”.