Digital investment platforms expand access but expose new investors to design risks

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Highlights

The use of digital financial services in Malaysia surged from 74% in 2021 to 92% in 2024, highlighting greater access to investment through digital platforms.
Investment app design—such as price alerts, leveraged trading and default financing settings—increases trading activity and exposes new investors to the risk of losses.
The Australian Securities and Investments Commission reported that retail CFD investors lost more than A$458 million in 2023–24, including A$73 million in fees, highlighting the risks of leveraged products.

This article was translated from the original. Read the original version by our correspondent here.

Investment access and platform design risks

The Edge Malaysia writes that increased participation in digital finance does not necessarily lead to greater consumer empowerment, especially when investment apps shape decisions through price alerts, popular-stock lists and options arranged to encourage more trading activity.

Bank Negara Malaysia reported that the use of digital financial services rose from 74% in 2021 to 92% in 2024. At the same time, the Financial Sector Blueprint 2022–2026 focuses not only on getting more users online, but also on improving the financial well-being of households and businesses.

This distinction matters because fast access to accounts and markets does not guarantee better outcomes. People can trade frequently and still make decisions that do not align with their original goal of building long-term wealth.

Research cited in the article shows that app features can also influence behaviour. A UK Financial Conduct Authority study of more than 9,000 people found that some trading app features increased trading activity and risk-taking, while a follow-up study of actual investors found that large losses were more common among users of apps with extensive engagement features.

Although these findings do not prove that app design directly causes losses, they challenge the assumption that greater engagement always benefits investors. For platforms that earn revenue from trading, spreads or financing, increased activity can benefit the business without necessarily helping retail investors saving for retirement or other long-term goals.

Implications for investor protection in Malaysia

Greater concern arises when risks are built into default settings, including the use of leverage or margin financing that less experienced investors may not realise they are taking on. In the examples described, some users only realised they had entered leveraged trades after their positions were automatically closed, or discovered that share purchases had been financed with a loan even though they had funds of their own available.

The article states that 30-fold leverage in some currency trades can mean that small price movements result in large losses relative to the original capital. This shows how default options, financing methods and automatic stop-loss mechanisms can have a material impact if they are not clearly displayed before a buy order is executed.

International data also highlights the scale of the risk. The Australian Securities and Investments Commission reported that 68% of retail clients who traded contracts for difference, leveraged products used to speculate on price movements, lost money in 2023–24, with total losses exceeding A$458 million, including A$73 million in fees.

In Malaysia, the National Strategy for Financial Literacy 2026–2030 and the Capital Market Masterplan 2026–2030 support the goals of broadening participation and helping people make informed decisions. However, the article argues that financial education alone is not enough if platforms are designed by companies that use behavioural expertise, interface layouts and data analytics to influence user actions.

Ultimately, the true measure of financial inclusion is not the number of accounts opened, apps downloaded or trades executed. The real test is whether the system genuinely improves users’ financial position, with loans, fees and trading risks presented clearly and requiring truly deliberate consent.

Our coverage of Bursa Malaysia’s midday trading momentum highlights tracked counters with unusual price and volume movements using proprietary algorithms, including several stocks flagged for negative momentum. We also emphasised that these momentum indicators are only signals of market conditions—not buy or sell recommendations—and are typically temporary, while providing fundamental and valuation scores to help readers assess the counters concerned.

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