Euroclear’s UK CSD, Euroclear UK & International, and Thinks Insights & Strategy have uncovered a surprising trend among UK investors. Despite technological advances, approximately 4.7 million UK individuals still hold paper share certificates. This traditional share management method remains popular, even with the financial sector’s evident digital shift.
Following the Digitisation Taskforce’s final report release in September, the research highlights the need for more digital innovation in finance. This is to keep pace with the rapid technological advancements of the 21st century. However, the large number of investors clinging to paper shares indicates a reluctance to transition to digital.
The Implications of Holding Paper Shares
Several implications arise from the prevalence of paper share certificates in the UK’s financial sector. First, it suggests a resistance to change within a significant segment of the investment community. This resistance could potentially slow the digitisation process and the adoption of new technologies. Second, managing paper shares tends to be more time-consuming and less secure than digital methods. Additionally, it presents communication challenges for companies with their shareholders, as they must resort to outdated methods like postal mail.
Finally, these investors might lack trust or understanding in digital platforms. Many might feel safer holding a physical certificate, viewing it as tangible proof of their investment. However, this is a misunderstanding, as digital platforms employ robust security measures to safeguard investors’ shares.
Clearly, there’s a need for more education about the advantages of digital shares. This could potentially motivate more investors to transition, thus speeding up the UK’s financial sector’s digitisation. Despite the hurdles, the research findings present an opportunity for fintech companies to engage these investors and endorse the benefits of digital shareholding.
