A more accessible version of investment banking, trading banks offer financial services to facilitate trading in the financial and currency markets.
You may already know that, traditionally, a trader is a financial intermediary who buys and sells stocks and other securities on behalf of their clients in the financial markets. The financial instruments include stocks, bonds, commodities, ETFs, currencies, indices, etc. It requires a wealth of financial services provided by banks and other financial institutes to facilitate smooth and secure trading operations. The bank that offers those financial services can be termed as a trading bank.
In the past, trading banking was an integral part of investment banking, where the bank used to rely on it for a large portion of their profits. These services were mostly exclusive to the bankers and some special clients. Thanks to the advancement of financial technologies, however, it is now also accessible to individuals.
Fintech Revolution of Online Trading Banks
Fintech is not just a buzzword. Rather, many things are going on in the sector that is shaping the present and the future of wealth management and personal finances. Making investment and trading in the capital and currency markets more accessible to the masses stands right at the forefront of this fintech agenda. The introduction of online trading banks certainly helped its cause by a multifold.
With features like an easy-to-use online trading platform, simplified trading account opening process, small initial deposits, and so on, some online banks are reshaping the way stock and forex trading is done. No longer an individual has to hire the services of a financial advisor or a professional trader. Instead, they can just use their smart devices, connect to the internet, and manage their trading portfolio in the capital market themselves.
By cutting off the middlemen, not only facilitates more convenient and less hassle-free trading activities but also bring down the costs by a great margin. Enough of standing in line, hustle with many traders in the exchanges, or paying someone to do it for you. You can now just be at the comfort of your home and put your money to work through trading.
There is no shortage of instruments to trade on either. With global stock exchanges right at your fingertip, the stock and currency markets virtually remain open even when you are asleep. It is also now possible to buy a fraction of stocks or ETFs if that’s what you can afford to trade with. Thanks to margins and leverages, you can also expand your trading exposures to multiply your profits.
Benefits of Trading Via a Bank
Generally, banks are more tightly regulated than just a random online broker. With protection from a financial governing body, it is much safer to deposit your money in a trading bank and put it into trading activities.
As these banks also often offer personal banking services, you can now manage all your finances in one place too.
