(Oct 30): Imagine a young Malaysian opening an online trading account for the first time. Within minutes, she can deposit RM500 and buy shares in companies halfway across the world. No visit to a broker's office, no substantial starting capital. A triumph of financial inclusion, isn’t it?

But what happens next?

Her phone buzzes with market alerts, popular stocks, and sudden price movements. For certain trades, leverage may already be selected, increasing both potential gains and losses. She came to build wealth, yet may take risks she never intended.

We celebrate that she has been financially included. But included in what, exactly?

Malaysia has good reasons to celebrate digital finance. Bank Negara Malaysia (BNM) reports that digital financial usage rose from 74% in 2021 to 92% in 2024. Importantly, its Financial Sector Blueprint 2022–2026 is not just about getting more people online. It also prioritizes improving the financial well-being of households and businesses.

That distinction matters. Someone can open an account in minutes, trade frequently, and still end up worse off. Access is a beginning, not proof of success.

Part of the problem lies in something we rarely stop to think about: who decides how our choices appear on the screen?

In their influential book Nudge, Nobel laureate Richard Thaler and Cass Sunstein describe choice architecture — how the presentation of options shapes decisions. Think of a box already ticked, or an option that takes three extra clicks to find. The choice is yours, but the design nudges you.

On investment platforms, this can take the form of flashing prices, trading notifications, and lists of trending stocks. Investors need information, of course. But there is a difference between helping people make decisions and constantly encouraging them to make another one.

Researchers at the UK's Financial Conduct Authority tested trading-app features on more than 9,000 people and found that some increased trading and risk-taking. A later study of actual investors found that large losses were more common among users of apps with extensive engagement features. That does not prove the features caused the losses, but it gives us reason to question the assumption that more engagement is always good for investors.

Why might platforms encourage it? Some earn revenue from trades, spreads, or financing. More activity may benefit the business while doing little for someone investing for retirement.

What concerns me even more, however, is what happens when risk is built into the default settings. Some investment platforms that make buying ordinary shares remarkably easy also offer much riskier products, including leveraged derivatives. And the distinction may not always be obvious to inexperienced investors.

In a FinTech unit I teach, students manage portfolios using virtual money supplied by a trading platform. Some — including students with a finance background — enter into leveraged trades without realizing that leverage has been preselected for certain instruments.

Consider a 30x leverage, available on some currency trades. With $1,000, a trader can take on $30,000 in market exposure. A mere 1% adverse price movement means a $300 loss — almost a third of the original $1,000, before costs. With leverage magnifying even small price movements, an automatic stop-loss may close the position much sooner than the trader anticipated. Some of my students discover they were trading with leverage only when their positions close unexpectedly.

Fortunately, their losses are virtual. But imagine the same surprise when someone's savings are at stake. If finance students can overlook this, what about someone with no financial background?

I encountered a similar surprise on a different investment platform, this time with my own money. I had turned on an automated cash-management feature that put my unused funds into money-market investments so they could earn a return until needed. Later, when I bought shares, I assumed the platform would draw on that money. Instead, I found that I was paying margin interest. On my account, borrowing had been the default way to fund the purchase; using my own money required me to find a setting and change it manually.

Why should borrowing money be easier than using your own?

Neither experience is an argument for banning leverage. Investors who understand it should be free to use it. The issue is why borrowing should be the path of least resistance for someone who never intended it.

Nor are the consequences trivial. 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. Their combined losses exceeded A$458 million, including A$73 million in fees. These are not ordinary share-investing losses, nor proof that app design caused them. But they show what is at stake.

We often respond to such concerns by telling people to improve their financial literacy. Learn about borrowing, read the disclosures, and understand what a stop-loss does. Malaysia's National Strategy for Financial Literacy 2026–2030 rightly seeks to help people make informed decisions and become more financially resilient.

Yet BNM recently highlighted something revealing: Malaysians' financial knowledge scores have improved over the past decade, while financial behaviour and attitudes have remained largely unchanged. Knowing more does not always mean doing better.

And individual investors are hardly operating on equal terms with digital platforms. Companies can employ designers, behavioural specialists, and data analysts to study how people respond to alerts, layouts, and defaults. Those insights can improve services, but they can also be used to encourage activity that benefits the business. On the other side of the screen is one person, perhaps investing for the first time, unaware of how much thought may have gone into influencing their next tap.

This is hardly a contest between equals. Teaching people to drive better matters, but we would never say it is a substitute for making roads safer.

The Securities Commission Malaysia's Capital Market Masterplan 2026–2030 seeks to broaden participation so that more Malaysians can build long-term wealth. That ambition deserves support. But if participation is to improve financial well-being, regulators must look beyond whether risks have been disclosed to how choices are actually presented.

Borrowing should require a deliberate, informed decision, not be something investors must discover and disable. How a trade will be financed, what interest it may incur and when a position might be automatically closed should be clear before someone presses "buy". Responsible platform design should be as much a part of consumer protection as financial education.

Investors have reason to be cautious, too. Before placing a trade, check whether leverage is enabled, how the purchase will be financed, and what charges or automatic controls might apply. These small checks can prevent expensive surprises. But consumers should not have to fight against a platform's design simply to protect their own interests.

Financial exclusion remains a genuine problem, and closing the door to digital markets is not the answer. Digital finance has opened opportunities that were once beyond the reach of ordinary Malaysians. We should celebrate that progress while recognising that getting people through the door is only the first step.

The real measure of financial inclusion is not how many accounts are opened, apps downloaded, or trades executed. It is whether people are better off as a result.

Getting people into the financial system is an achievement. Ensuring that the system works in their interests is the real test of financial inclusion.

Dr Mirzet Šeho is Senior Lecturer in Finance and FinTech at Monash University Malaysia