I agree with your post in large parts. I’m just not so sure this is a universal winning formula. I don’t necessarily agree that by branching out through partnerships to provide a product that focus is necessarily lost.
1 reason why they wouldn’t: suppose you’re already 1 of Revolut’s 2 million customers. Would you buy Facebook through an app you’re already using, or would you go through the effort to find out whether you like Freetrade, download it, go through KYC again, and then buy Facebook through Freetrade? Genuine question I had today.
I used to be HL then I moved to AJ Bell because of reasons (can’t remember them all now haha) but I also open up Lloyd’s Bank share dealing because their regular saver is the best I have seen so far.
I personally believe people will move to Freetrade, not all of course, and some may not move their money but use Freetrade as yet another broker (risk spreading etc.)
But eventually … they will all belong to Freetrade! (joking on this last bit … or am I?)
I personally feel that the discerning and financially literate will definitely gravitate to Freetrade, excluding those who want margin trading & a lot of the 2 million Revolut have as an installed user base.
However, the competition is on for the average customer.
Depends on a few things. Trust is big, so if you have a bad experience with their other services then you might think twice about extra services. Also depends are you intentionally investing or just dabbling and buying a few shares in some companies you like.
You won’t be able to buy stocks with the KYC you pass at Revolut, any other prepaid card app, or a real bank. MiFID II means you’d need to provide additional information, plus more if you want an ISA or SIPP. If you want to trade US stocks and not pay withholding tax, another bit of onboarding for that.
As I said previously, the user experience you build for a pure stockbroker is different than other financial services. We’re optimising for one thing.
To add to what @saf said, Revolut has a significantly larger overhead than Freetrade, which is why Freetrade will become profitable quicker without requiring a huge pool of customers.
Glad to hear this Adam. Specialisation is key. I also think marketing will be just as key because I use an app called Abra for example, which is fantastic, however i don’t think it’s gained the traction it should have due to nobody other than those in the Litecoin community knowing about it (& also bad timing in terms of launch).
I didn’t know Revolut were going to launch did I. I don’t have a .
But I’m a Crowdcube Investor for the same reasons you are. I’m just conscious of the competition & providing feedback that can help Freetrade be successful? Is this offensive to you? Should I colour my comments with overt optimism?
No worries. I do try to use emojis a lot to sound better - I’m a bit of a thinker - so will try to be more balanced myself
I hear crystal balls are amazing tools for stock trading, along with tarot and palmistry
Is it insider trading if I ask the spirits what will happen with company xyz?
Nope, FCA or SEC would not classify that as insider trading. Go ahead and share the details with us too
Lol no idea, but please do share your intel with us if you happen to be successful with the spirits
Gin or Whisky? What provides better ROI
It’s great to see competition in the marketplace because for consumers, we have a great choice and causes startups like Revolut and Freetrade to bring their A game, build real useful products and challenging the incumbents.
I’m not worried at all about Revolut’s entry. Going back to the Freetrade investment deck, you’ll know that the opportunity set is massive (UK and globally) and is clearly not a winner takes all market. All around the world and in every country there are multiple large scale brokers and banks with brokerage arms. Every banks claims to be full service yet there are loads of them around.
Let’s use Robinhood as the most mature example of the zero commission stockbroker in the most dynamic financial market in the world, the US. They have been operating since 2011/12 (correct me if I’m wrong here) and they only have 4m accounts? This is in a country with 300m, ie at least 300m accounts (even if you take out the youth population, most Americans will have a 401k and maybe even another general investment account).
It is not a winner takes all market. There is a lot of opportunity for disruptors to come in and shake things up and capture market share.
Totally agree on that!
Honestly, I think the Revolut announcement had also a positive effect on freetrade (at least that´s my point of view): a lot of attention in social media!
Not really concerned with Revolut entering this space. It is yet another attempt to see what sticks to the wall. I am Revolut user and have tried their solutions - insurance, crypto, credit and still can’t be convinced to use them on ongoing bases as they lack the fundamentals compared to the leaders in each of these categories. (please excuse my subjective bias)
They’ll get some kind of market share but they lack the focus to build the best product and lead in a particular category. I might be cynical but it looks like just another Virgin-like company out there. Their move might turn out to be beneficial for Freetrade as some of the users will be introduced to stock trading for the first time and will then look for a better alternative. So not really a threat on markets where stock trading is more of a habit.
Central and Eastern European markets lack enough providers and real competition, fees are high, expected LTV of the users is significantly lower. Revolut were and still are quite successful in penetrating that market. Any solution that Revolut comes up with has a good chance of survival as very few companies look into addressing that market. In my view this is the real danger as they will have enough time to use their dominant position to build relationships with the audiences on such markets.