There’s a tsunami sweeping across capital markets. It’s growing faster, bigger and stronger every day. It’s a wave of private investors who are finally able to actively participate in the markets.

And it all begins with user-centric design.

I recently wrote about the impact user-centric design will have on securities lending for each of the industry’s key personas, based on my experience at Sharegain.

Our starting point was very simple: everyone has the right to take part in securities lending. If you build products around that right, rather than around the existing processes of incumbent institutions, then you’ve cracked user-centric securities lending. And I gave a few examples of what this looks like in practice.

What I didn’t explore were the consequences. The changes we’re igniting when we bring user-centric design to securities lending. You can sum these up in one word: Accessibility.

By actually building securities lending solutions for the benefit of both end users and financial institutions, we can build a more inclusive ecosystem. The barriers come down, participation increases and an even greater number of stock owners start to benefit from an additional source of income.

In other words, user-centric product design is opening the floodgates of mass participation in our industry.

With greater participation comes larger, more diverse supply. Today, the biggest lenders in securities lending are institutional investors. This in turn, shapes the market: lendable supply is dictated by the investment decisions and risk appetite of a small group of very large firms.

By bringing more private investors into the securities lending ecosystem, borrowers will enjoy greater liquidity in hard-to-borrow stocks, bonds and ETFs. This in turn will make it possible to carry out trades that can’t be completed today, because of a lack of supply.

A securities lending market with hundreds of thousands or even millions of users will undoubtedly create new and exciting changes. The sheer volume of new data points and new optimization opportunities will be transformative and will form the foundation for the next generation of securities lending solutions. It’s still too early to say what it will be (although I have my own predictions that I’m happy to share if you are interested).

This is the part of my job that’s most exciting – the chance to design and build products that unlock a new revenue source and, ultimately, help to improve people’s financial lives.

It’s this wave of change that we saw at Sharegain. We envisaged a world where every owner of listed securities can participate in our industry. A world where securities lending works better for both individual investors AND institutions. To achieve that, we brought a user-centric mindset to every stage of the client journey, from onboarding through to receipt of lending revenues.

The wave of mass participation in our industry that user-centric design has enabled isn’t slowing down. It certainly isn’t going away. Now, we’ve got two choices. We hide from it. Or we ride it.

 

Amnon Cohen is Head of Product at Sharegain. This article originally appeared on his LinkedIn.

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