What What What

What do trading platforms and car makers have in common? More than you’d think.

Charles White-Thomson

CEO, Saxo Markets UK

As technological innovation becomes ubiquitous in every industry and attitudes increasingly shift among discerning end users, businesses’ future success will depend on greater collaboration between seemingly disparate industries and their ability to apply these lessons to deliver a seamless user experience.

This idea had been brewing in my mind when I first met my counterpart, Kristian, MD of Volvo Car UK – with whom Saxo shares a parent company, the Geely Group. While the meeting was set up to explore synergies between the two companies, and how the investment process at Saxo could be influenced by Volvo’s approach to clients, it became immediately apparent that despite offering two very different products and services, we had a lot of similarities. Now, one would think, what could a car maker have in common with an investment specialist? More than meets the eye, actually.

Brand Scandinavia is at the heart of it. Both Volvo and Saxo have strong Scandi roots with a global reach, a clear emphasis on technology and the ability to scale digitally. Both companies offer customers an incredibly seamless user experience – the Volvo purchase process takes place via an efficient and smooth online platform, whereas at Saxo, a single login and technology stack gives you access to 46,000 financial instruments.

Both companies also have a strong focus on risk management and safety. Volvo is globally fabled for its safety record, such as the introduction of the three-point safety belt in 1959 – the single most important safety feature in a car and one which is estimated to have saved more than one million lives. Saxo, too, in comparison to its counterparts, has a laser-sharp focus on risk management and client education. Or, to put it another way, whether driving or investing, the advice is to always wear a safety belt.

It is our joint focus on customer safety and risk-mitigation that provides the greatest opportunity for further experimentation and collaboration. Part of Volvo’s impressive safety track record is down to testing its cars’ ability to withstand high impacts or crashes. This involves crash test dummies with sophisticated sensors to truly understand the impact of crashes on the delicate human form. Interestingly, crash test dummies are no longer simply based on an ‘average’ man’s physique and now come in all shapes, sizes and genders, including babies, infants and even pregnant women. Virtual crash test dummies are also used to better understand specific crashes and help protect all car occupants in an equal way. This physical and digital approach offers highly effective analysis and provides invaluable data and guidance without risking a human in the first place.

Taking Volvo as inspiration, at Saxo we asked ourselves: can the same approach to safety experimentation and analysis be applied to trading and investing? At a time when markets are beginning to believe that a major stock market correction might be round the corner, there is a gradual withdrawal of liquidity, an end to the rock-bottom interest rates and record inflation, what can investors and traders learn from the risk management and safety protocols that Volvo applies to its car making?

It is obviously not ideal to rig a client up to sensors and then crash their portfolio by 50%. The data would be fascinating but perhaps a step too far. On the other hand, a misunderstanding of risks could deal a fatal blow to people’s portfolios and therefore livelihoods.

This is why at Saxo, we have decided to bring the crash test dummy concept to the investing world through SaxoScenarios – a new simulated trading platform that allows clients to invest over a historical period, where they can experience the actual moves and volatility of financial markets during real events such as the US-China trade war or the peak of the Covid-19 pandemic.

This, in turn, encourages investors to diversify their portfolios, question correlations and use hedging instruments to navigate real-world risks. Although not a crash test dummy, the user goes through similar emotions, experiences, and profit and loss moves without spending real money.

To add focus, we’ll benchmark SaxoScenario players in a leader board, with prizes for the top 20 performers. The aim is to remind investors that markets are likely to be more volatile than in the past decade, portfolios are unlikely to go up in a straight line continually, and investors must develop skills which will allow sustained returns throughout the cycle.

So, the takeaway of all this is whether driving or investing, the advice from Saxo and Volvo is to encourage customers to travel and explore new horizons – so long as they wear a safety belt. Put another way, an investment portfolio, like a car, has many gears.

Clearly, there are more similarities than meet the eye.

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