US fintech star Robinhood is today rolling out its brokerage services in the UK, offering investors commission–free trading in thousands of US-listed stocks including Tesla, Amazon and Apple.
Robinhood UK president Jordan Sinclair hailed the much-trumpeted launch as an “awesome opportunity”, saying Robinhood “can become the primary brokerage for UK customers”.
Robinhood is not offering investors the chance to trade in UK equities at launch through its app, and the US star will face challenges from a raft of competitors, as it makes a fresh foray into the UK market after two previous failed efforts.
Robinhood has over 23 million customers in the US and is famed for introducing commission-free trading to the masses, disrupting the market.
UK launch on rolling basis
Robinhood is launching its UK proposition on a rolling basis, with a full rollout in early 2024.
From today, UK investors can join the waitlist to access 6,000 US-listed stocks and ADRs (American Depositary Receipts), which are US bank-issued certificates representing shares in foreign companies for trade.
Like in the US, UK investors can trade without foreign exchange fees and use Robinhood’s “24-hour market” to trade outside market hours.
Investors can open an account with $1, earning five percent AER (Annual Equivalent Rate) on uninvested cash, as they work out their investment strategies.
Robinhood hopes to mirror US success in UK
Robinhood bosses believe its success in the US, where it experienced a 27 percent increase in household holdings in equities between 2013 and 2022, can be mirrored in the UK, which saw just a one percent increase in the same period, according to its data.
But Robinhood will face challenges from established players like Hargreaves Lansdown and trading startups such as Freetrade and Public as well as the likes of challenger bank Monzo.
Yet Robinhood, also famed for its role in the meme stock mania, garnered a waiting list of 250,000 users in a previous attempt to crack the UK market, indicating its popularity. Sinclair did not share any data, including a waiting list, relating to the current launch.
Customer needs not being met
Sinclair, a former Freetrade and Barclays executive, is confident the Robinhood UK app will hit home with UK investors.
“We still have a market dominated by traditional brokers, charging high fees and commissions and customer needs are still not being met on their investment journey.”
Robinhood has diversified revenue streams and Sinclair believes that its success in the US, and its array of customer data, will help propel it to success in the UK.
Its revenue streams include a 0.03 percent charge for the amount deposited from an investor’s bank to the app; and the spread between the interest earned on customers’ cash holding and interest paid.
It will also look to bring subscription products across the Atlantic, such as Robinhood’s Gold account, which has a raft of perks including Nasdaq market data and higher interest on invested cash than its free accounts.
Sinclair said Robinhood- which also plans to soon launch crypto trading across the EU- will also look to bring Robinhood’s US retirement account to the UK, which includes ISAs and SIPPs.
Sinclair says: “We look at our retirement product in the US and how we can deliver that in the UK in a tailored Robinhood experience.
“Tax wrappers like ISAs and self-invested personal pensions, are important tax-efficient accounts for UK customers."
App tailored to UK market
Robinhood’s UK app is tailored to the UK market, Sinclair points out.
“We haven’t taken our US product and business and just dropped it here,” he says.
As an example, he cites a news feature within the app, in which investors can glean the latest stock market announcements and other investor news, helping their investment decisions.
On the absence of UK equities at launch, Sinclair says:
“UK equities we know are an important part of a UK customer’s portfolio, and they are by nature global investors. It’s absolutely something we will look to deliver on our roadmap.”
Robinhood has a smallish UK team, based in the City of London.
Sinclair also referred to the UK being just part of Robinhood’s global ambitions.
Vlad Tenev, CEO and co-founder, Robinhood, said:
“Since we launched Robinhood a decade ago, it’s always been our vision to expand internationally. As a hub for innovation, global finance and top tech talent, the United Kingdom is an ideal place for us to launch our first international brokerage product.
“We look forward to continuing to engage with customers and policymakers as we expand our offerings in the UK."
Lead image via Robinhood.