The popular stock trading app Robinhood is once again attempting to move forward with its ambitions of expanding internationally by opening early access registration for UK customers again.
The move represents a milestone for the company after previously aborted attempts to enter this European market over the past several years.
Robinhood is granting UK residents early access to the app on a rolling basis, with full availability expected by early 2024. The app will provide access to commission-free trading on over 6,000 US stocks to begin with. Additional planned features include high-yield interest on cash balances, extended trading hours, and no foreign transaction fees.
“Our expansion to the UK marks an important milestone in our journey to democratize finance around the globe and increase access to the markets for all,” said Robinhood co-founder and CEO Vlad Tenev in a press release published this morning.
Learning from Past Mistakes May Help Robinhood Succeed This Time
Robinhood initially sought to debut its UK operations in late 2019 but halted the plans in 2020, citing overwhelming domestic growth that demanded focus. The following year, a proposed acquisition of UK crypto app Ziglu also fell through after the company took a $12 million impairment charge on its investment.
Now, with a platform that has already been able to survive highly chaotic market events and a user base that has expanded to more than 23 million Americans, Robinhood is revisiting its global ambitions. The President of Robinhood UK, Jordan Sinclair, said that the company has matured substantially since its last attempt to enter the market and is ready to properly serve international clients.
“For too long, UK investors have incurred high fees to invest in the US markets and earned low returns on their uninvested cash. We’re excited to give UK customers access to the Robinhood experience, remove unnecessary fees, and join our more than 23 million investors”, Sinclair commented about the widely-awaited launch of the trading app.
Tailoring its Offering to UK Investors
Robinhood is making its way to the with @Robinhood_UK!
UK residents: Join the waitlist and get set for around the clock access to US stocks and 5% interest rates on cash — protected up to $2.25M https://t.co/7ycKF12k5Q
All investment involves risk, including loss of principal pic.twitter.com/hPLSNmixQm
— Robinhood (@RobinhoodApp) November 30, 2023
True to its founding ethos, Robinhood has tailored its UK brokerage model around the needs of local customers. Users can open accounts with no minimum balance and invest as little as $1 into fractional shares. Additionally, an interest rate of 5% AER can be earned on uninvested cash balances above waiting threshold levels.
The ability to trade US shares 24 hours a day, 5 days a week should also resonate with UK investors accustomed to following Wall Street moves. Extended trading access means that users can react swiftly to overnight news and events that impact share prices.
In addition, UK customers may find it more comfortable to trade US-listed securities at more convenient hours considering the 5-hour difference that they usually have with the US. This means that they typically have to wait until past midday to operate in the US market and wait until the regular trading session is over at night time.
Robinhood is also including educational content and real-time data analytics that empower novice investors to make informed decisions. The materials that this provider will be making available go from beginner tutorials about core concepts to a weekly column simplifying complex financial topics.
Straightforward Pricing Continues to be Robinhood’s Most Powerful Competitive Edge
Since Robinhood postponed its expansion in 2020, the UK online trading scene has seen an increase in the number of neobroker upstarts like Freetrade, Stake, and eToro. However, Robinhood’s brand and slick mobile interface should help differentiate its core offering from its rivals. The implementation of straightforward commission-free trading also disrupts the status quo, as most UK platforms charge fees to customers one way or the other.
For now, Robinhood UK will be focused strictly on US stocks and deposit/withdrawal transactions involving currency conversion from GBP to USD. However, Sinclair said that adding local UK shares and more asset classes remains on the product roadmap for future builds.
Crypto trading is another anticipated rollout, slated for the wider European Union market by next year as regulations evolve around stablecoins. The firm’s specific plans concerning its crypto services keep moving forward, pending further regulatory clarity to be fully rolled out.
Funding UK Growth
Historically Robinhood has relied heavily on payment for order flow (PFOF) revenue in the US, which UK regulations prohibit. However, Sinclair expects that diverse income streams like subscription fees, securities lending income, and interest on cash balances should help the firm monetize its user base in the European country.
While the US business has been weathering market headwinds lately, analysts see expansion into the UK and beyond as logical growth levers for Robinhood. Investors are keen to see the company replicate its winning formula globally, capturing younger investors through strategies like gamification and democratization of mobile investing.
If UK traction mirrors early US uptake, Robinhood could rapidly emerge as a formidable force in this market. Its polished tools for self-directed trading resonate with digitally savvy masses and its ambitions to democratize finance still hold weight despite past missteps.