Public’s COO Stephen Sikes Talks Rising Rate Effects and New Products
Dec 7, 2023
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The podcast explores the effects of rising interest rates on retail investor behavior and Public's innovative product strategy. They discuss the importance of providing market context and a wide range of investable assets. The differences between fixed income funds and individual bonds are explored, highlighting the risks associated with bond funds. The influence of interest rates on retail investors and strategies for aligning incentives are discussed. The importance of trust and long-term commitment in the business model, especially for younger customers, is emphasized. The significance of ongoing conversations about AI in the Fintech industry is highlighted.
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Quick takeaways
Retail investors are diversifying portfolios towards fixed income assets due to rising interest rates.
Public has launched a mobile-first retail bond trading platform with a user-friendly screener and limit order functionality.
Current regulatory constraints hinder the effective use of AI in financial services, but more competition and innovation are needed to drive incremental change.
Deep dives
Helping retail investors invest and providing market context
Public focuses on helping retail investors by providing them with the best context on the markets. They gather interesting information like news, market data, and editorial content to help investors make informed decisions. Additionally, they aim to build a broad platform of investable assets, including stocks, ETFs, crypto, alternatives, royalties, cash flow generating assets, fixed income, and corporate bonds.
Making investing engaging and fun
Public believes in making investing appealing and engaging for retail investors. They understand that building great context and engaging content makes investing feel like a hobby that investors can succeed at. They prioritize accessibility and aim to create an engaging user experience in their mobile-first platform to make investing easy and comprehensible for their users.
Retail investor behavior and the shift towards diversification
Public has observed changes in retail investor behavior over the past few years. Initially, there was a surge in interest towards speculative assets like meme stocks and crypto. However, as interest rates began to rise and the market evolved, retail investors started diversifying their portfolios. They began to incorporate ETFs, followed by T-bill ETFs, and eventually showed demand for owning the actual underlying T-bills. Public responded to this demand by offering a platform for investing in T-bills and expanding their options in fixed income. They have observed a shift in investor preferences towards more diversified portfolios that include fixed income assets.
Introducing a Mobile-First Retail Bond Trading Platform
A new mobile-first retail bond trading platform has been launched, offering retail investors access to Treasury and corporate bonds. The platform includes a selection of 5,000 individual corporate bonds and a full range of treasury notes and bonds. A unique feature of the platform is a user-friendly screener that helps investors find bonds that match their investment parameters. Additionally, the platform allows investors to place limit orders to buy bonds, providing more control over pricing in the bond market.
Harnessing AI in Financial Services
The use of AI in the financial services industry is being hindered by regulatory constraints. While AI has the potential to enhance investing experiences, deliver better information, and increase savings, the current regulatory environment poses challenges for startups and smaller firms to harness AI effectively. However, there is a need for more competition and innovation in the space to drive incremental change and improve investment outcomes for retail investors. Employing large language models and AI in delivering investment content and recommendations requires careful consideration of regulatory compliance and the potential impact on industry practices.
Reggie Young sits down with Stephen Sikes, COO of Public, as they explore the fintech landscape's evolving dynamics. They discuss the significant effects of rising interest rates on retail investor behavior and delve into Public's innovative product strategy, including the launch of a mobile-first retail bond trading platform.
Stephen shares thought-provoking perspectives on regulatory challenges, the role of AI in financial services, and the importance of pragmatic incrementalism in achieving meaningful societal and industry-wide progress.
This episode is a must-listen for anyone keen on understanding the intersection of finance, technology, and user experience.
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