Robinhood


#65

They are rebranding it to a “cash management program” and pushing back the launch date. The marketing tweets have been removed as has the product page.


(Emma) #66

They’ve made a total mess of this.
Proves the theory that if something looks too good to be true it probably is.


(Big Boss) #67

Ohhhhhh, so it’s a money market fund! Pretty cheeky to call it a savings account. :sweat_smile:

So much for “financial innovation”. Surprised their legal team let this one through! Their announcement helped them sign up 600k new users yesterday. Guess it did the job? :thinking:


#68

In-house legal/GC probably got pressured to greenlighting it even though (if they did their job properly) the legal advice should’ve been mirroring what SIPC was saying.


(Chris) #69

Freetrade bring the exception that proves the rule?


(Big Boss) #70

Good article by Bloomberg stating what we already know now. I think most people in the finance industry were cynical that Robinhood could pull off such a high savings rate without risk taking and falling foul of bank regulation. Proved to be true.

https://www.bloomberg.com/opinion/articles/2018-12-17/robinhood-checking-moved-fast-and-broke


(Emma) #71

Cynical me thinks they must have known all that so either they hoped they could pressure the regulator into allowing it because of all the hype or it was for publicity


(Kenny Grant) #72

I suspect they will reintroduce with different terms at a later date.

They could probably offer some sort of 3% savings account if it was clear to customers that the customer was choosing to invest directly in say bonds with that return and be covered by the regulator.

Likewise they could probably offer a prepaid card account backed by cash stored in a proper bank (as all those prepaid products are doing), which feels to the customer like a bank account, even if it doesn’t have all the features of one.

They probably can’t offer things that look like bank accounts that aren’t, without describing them in a clearer way. I wonder if they plan long term to get into retail banking? I personally wouldn’t trust them with my savings and think this was a blunder, but it is interesting that with the democratisation of investing & banking options are opening up to retail customers which just were not available previously.


(Alex Sherwood) #73

There’s been some speculation on twitter (Pascal & Ron should know what they’re talking about), that Robinhood were planning to launch a Money Market Fund here. Those behave a lot like a bank, rarely fail & can pay a relatively high rate of interest. But that’s not the same thing as providing a checking or savings account..

So I’m wondering if Robinhood will go ahead & launch this, while hopefully making it more clear exactly how they’re managing their user’s deposits.


(Giridhar Tammana) #74

I think they wanted provide something like what IB does but only for balances above $100,000.
And for me the interests are very generous and can be used as checking account.

https://www.interactivebrokers.com/en/index.php?f=25066
https://www.interactivebrokers.com/en/index.php?f=1595


(Alex Sherwood) #75

Here’s a longer explanation from Ron about the challenges Robinhood faces with these accounts :popcorn:


#76

News on Robinhood that may be of interest.


#77

Go away Robinhood, this is Freetrades turf!


#78

@Piggy Very interesting and it’s also a bit worrying. I guess this is a call for Freetrade to double-time as the possible competitors are not sleeping and many Android users are frustrated. :bookmark:


#79

No pressure Freetrade team!!:wink:


#80

To me, the pressure is on actually. :stuck_out_tongue: It’s good to have that as motivation. It gives you that extra kick and challenge. If we can’t beat them, loads of Android users will join other apps and if they offer the same thing as Freetrade does, there’s no point coming back unless they’ve invested of course. Just thinking about how many possible users we would lose if ever. Luckily, they’re still far behind. At least Robinhood is, but not sure about Revolut as they seem to do things so fast. Nevertheless, my loyalty will remain here and patiently waiting. :rose:


(Rob N) #81

Currently only Freetrade has a UK stockbroking licence. It looks like it might be early days for Robinhood, Revolut are going through an intermediary initially and getting a full licence in the longer term.

I imagine the apps will be quite different in focus, as that’s what’s happened with challenger banks as well as the existing brokers…


(Big Boss) #82

Got to agree with @Rob14 here. If Robinhood are recruiting currently then they are probably about six months or more away from a viable UK-regulated product. Furthermore, their model would have to change in the UK as they cannot replicate the way they achieve revenue in the US (paid for routing orders).

Revolut is probably the one to look out for… although I don’t know how much of their userbase are that interested in using them as a stock broker. I’m sure they’ve done the research but those who use Revolut just for FX overseas wouldn’t be bothered…

Anyways, we’ll see. Competition is natural and Freetrade just got to keep on keeping on.


(Andrew Clark) #83

Isn’t there a significant difference between an out and out stock app like Freetrade and an app where stock trading is one of many options, screens, things you can do? One lives on your homescreen, the other lives in a fairly crowded ecosystem (Revolut - fairly confusing user journey). For one it is the focus, for the other it is a me too feature. I’m not sure they will necessarily eat each other’s users and hopefully there is room for both.

Either way, presumably competitors to Revolut might like to purchase a lovely spanky stock trading app like Freetrade to integrate into their equivalent product? There’s a long way to go and you have to assume that Revolut etc will have the same sorts of issues with workflows for foreign stocks, Android as a platform etc. In many respects life is easier for Freetrade as, for now, they just have UK regulation to deal with so an order of magnitude different from what Revolut have with their multiple markets, languages etc?


#84

So imagine if robinhood wanted to shortcut their U.K. entry and offered to buy Freetrade for say £500 million - who would say yes?

(Would Freetrade say yes do we think?)