EasyEquities under siege

EasyEquities has long had relatively free rein in the South African retail investing market, rapidly growing its client base and accumulating over R55 billion in assets on its platform. 

However, this appears to have ended with two of South Africa’s largest banks, Investec and Standard Bank, launching direct competitors. 

Traditional banks have substantial edges over EasyEquities due to their significant distribution channels and ability to use the excess cash on the platform for traditional banking activities.

Their scale should also enable them to offer lower trading fees, as they already have significant share-trading operations.

However, taking on EasyEquities will not be easy. The platform has grown rapidly over the past few years, nearing one million clients and R60 billion in assets. 

Its parent company, Purple Group’s, full-year results revealed that its client assets grew 24.8% year-on-year and active clients by 10.4%. 

“Purple Group has spent a decade breaking down barriers, opening doors, and reimagining what’s possible for all investors,” Purple Group CEO Charles Savage said following the results. 

“In 2024, Purple Group didn’t just sustain growth; we unlocked new realms of opportunity, setting records and scaling the impact of our platform.”

“Over the past 10 years, our annual growth rates have consistently defied expectations, and these figures testify to the value we bring to our clients and shareholders alike.”

Savage highlighted deposits as a powerful indicator of platform health, and this year, Purple Group saw record-breaking numbers as deposits grew by over 25% year-on-year.

EasyEquities has to grow rapidly for years to achieve the scale necessary to make the business consistently profitable and expand its margins. 

The platform has been under financial pressure in the past two years, and it has had to introduce a “platform fee” as a mandatory Thrive subscription. 

All EasyEquities users who do not reach level 3 of the Thrive loyalty programme will be charged R25 monthly.

At the same time as this controversy surrounded EasyEquities, Investec revealed that it was looking to open its Clarity platform to the public as a competitor to the Purple Group-owned offering. 

Standard Bank was also rapidly expanding its Shyft offering from being a pure forex trading platform to enabling share trading on global equity markets. 

Competitors rise to the challenge

Clarity by Investec was officially opened to the public at the beginning of February after being only available to the bank’s private banking clients. 

The platform provides registered account holders access to over 750 instruments listed on local and offshore markets through contract-for-difference (CFD) instruments. 

The platform promises “transparent, competitive pricing with zero admin, platform fees or broker commissions”.

Therefore, every time you trade, Clarity’s fee is automatically priced into the spread (up to 0.2%). The spread is the difference between the sell and buy price at which the transaction is executed.

If you trade on margin, Clarity also has margin rates. The platform charges up to 50 basis points on the forex spot rate when converting currencies between ZAR and USD.

“The average time for clients to execute a forex trade is just 25 seconds, providing clients with the opportunity to express a view on the currency and access low-risk savings products in that currency,” Clarity head Tinus Rautenbach said. 

There are no minimum investment requirements, and while average account sizes align with industry standards, some portfolios exceed R1 million.

Clarity explained that there is a growing desire among retail investors and high-net-worth individuals to manage a discretionary portion of their portfolios themselves.

Rautenbach said he is confident that Clarity will appeal to a broad spectrum of individuals beyond seasoned traders, bolstered by the support of the trusted Investec brand. 

“Offering a digitally led platform for DIY investing with no brokerage fees appeals to a larger customer base, serving as a potential gateway into the Investec ecosystem,” he said.

Since its launch, Clarity has continued to evolve based on consumers’ needs, with new products and instruments added based on client feedback.

Savage has sharply criticised Clarity in the media, saying the platform does not offer share ownership, has different tax treatment on dividends and profits, and does not afford investors voting rights. 

Savage argued that Clarity is more for traders and is, therefore, nothing like EasyEquities, which is aimed at traditional investors.

Shyft comes home

Standard Bank’s Shyft offering has been around since 2016 as a platform built for buying and selling forex. 

This was initially aimed at helping South Africans purchase forex digitally and spend their money globally through a physical card or virtually. 

Standard Bank launched the offering to help its clients easily purchase forex cross-border payment solutions to manage their international currencies.

The bank decided to open the platform to any South African and, due to its tremendous scale, offers the lowest forex rates in the country. 

Gradually, the offering expanded beyond forex to enable South Africans to invest in global equities, beginning with the US.

Over the past few years, it has expanded its investing universe to include European equities and UK-listed companies. It is set to offer access to the Australian equity market soon. 

Until now, the investment proposition has provided clients instant access to over 1,000 top global stocks and ETFs on the New York, London, and Frankfurt stock exchanges. 

On 27 March, Shyft announced that it would give its clients access to investing on the JSE as well, enabling clients to invest in local companies and ETFs.

Standard Bank has traditionally offered share trading through its SBG Securities platform and low-cost alternatives on its banking app.

“Shyft is built on making transacting easy for consumers, and we are immensely proud to be partnering with the biggest exchange on the continent to offer clients and prospective clients a unique diversification opportunity,” the head of Shyft, Glynn Allen, said. 

Allen explained that Shyft will not charge any administration fees and only levy a safe custody fee of 0.12% for holding investors’ money on the app. Trading on the JSE will be free for April.

Shyft is looking to roll out its offering across the continent in the 22 markets in which Standard Bank currently operates. However, Allen said the expansion will not be rapid due to the complex regulatory environment.

The bank has applied for a licence to operate Shyft in two to four African countries.

The app already offers a Botswana Pula wallet to people in that country and will be adding a rand wallet to its Botswana offering soon.