Robinhood Edited
Robinhood Edited
Robinhood Edited
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Robin Hood
Introduction
Fintech which stands for financial technology, is a concept involving companies utilizing
technological platforms as their primary commercial service provider to innovate products and
transact financial services efficiently. According to Skan, Dickerson, and Masood, when it comes
to financial transactions, the traditional banking system has played a significant role, but the
digital world is gradually changing this fact as a result of increased technological development.
Financial technology companies are rapidly transforming the various financial markets that have
Financial technology companies (Fintech) have led to the creation of different business
models together with increased customer needs by affecting various economic aspects such as
payment services, financial regulation, and the banking industry (Salmony). There has been an
increase in new financial services in the market, filling the various gaps created in the financial
market.
Financial technology companies have come up with new innovative solutions that have
been able to provide customers with high transaction speeds, ease of use, and a wide range of
service providers. Financial technology companies are a concept of the 21st century where start-
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up companies are striving to diverge traditional financial transaction forms into modern methods
that are more effective by utilizing high-tech devices such as loans, mobile payments,
Some of the technology in use by Fintech companies include; mobile banking, peer to
peer payment technology, Block-chain, peer to peer lending, and digital wallets. These
technologies are utilized to accrue improved benefits and efficiency in financial transactions
Salmony, in his article, writes that there are two different categories of financial
Competitive Financial technology companies are those companies that create direct obstacles
companies have created a successful niche for themselves by providing benefits and new
experiences to customers by the use of technological products instead of targeting for high
profits.
Collaborative Financial technology companies, however, have been the driving force
towards the evolution of financial institutions and consider the currently existing financial
innovating their products and services as well as transforming traditional business models of
Apart from the above collaborative financial technology companies also aid financial
with day to day business services by the use of high-tech products and innovation. Financial
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Robinhood
Founded by two graduates from Stanford University, Vladimir Tenev, and Baiju Bhatt in
2013, Robinhood is a financial technology company that is currently valued above $5.6 billion
with over 4 million users and has transacted over $150 billion. This financial technology firm is
based in the United States with its headquarters in Menlo Park, California.
The main feature of the firm is a smartphone mobile application called Robinhood that
enables customers to invest in companies that trade publicly and exchange-traded funds that have
been listed in the United States stock exchange without having to pay any commission.
Robinhood financial technology firm makes its profit from the interest that has accrued from
The name of the company ‘Robinhood’ is as a result of the firm’s mission of giving
everybody access to financial markets and not only the rich. After its unexpected launch on
Hacker News, a news website dealing mainly with technological advancements, the firm already
had a customer waiting list of over 150,000 people. By the end of 2014, the financial technology
firm had a waiting list of over 500,000 subscribers, which is only one year after being launched.
According to Skan and Masood of all the subscribers to the Robinhood mobile
application, Millenials were the majority by 2015, making up 80% of all the subscribers with the
average age of customers being 26 years. Of all Robinhood customers, 50% of the users who
have traded using the mobile application do it daily, while 905 of them utilize the mobile app
The financial technology firm had already made a whopping $539 million in terms of
venture capital by the year2018 after being valued at $5.6 billion and increase from $1.3 billion
the previous year(Investopedia).In the year 2019, the founders Vladimir Tenev and Baiju Bhatt
Robinhood Products
Trading in Crypto-currency
transactions such as payments and transfer of money between two or more users through
technology. An excellent example of cryptocurrency is bitcoin which was born in 2009 and
allowed users to trade it for goods and services with clients who accept cryptocurrencies as a
mode of payment
January 2018, and on the first day after announcing the company already had a waitlist of over
one million users. Users in California, Missouri, Massachusetts, and Montana were the first to
enjoy this feature by trading in Ethereum and Bitcoins in February of 2018, with the company
expanding the services to Mexico and Wisconsin by May of the same year. One year after the
launch of the above function, trading in crypto-currency through Robinhood had reached around
Exchange-traded funds and trading in stocks were the first services being offered by
Robinhood at its launch. Over $30 billion in trades had already been executed by the year 2017,
and in August of the same year, users were being offered free stock whenever they referred to
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new users. Robinhood’s free commission trading resulted in other brokerage firms such as TD
Banking
Robinhood’s spokesman announced that the firm had intentions of obtaining a banking
license in 2018, this feat was accomplished in December of the same year when the firm
announced users could open checking and savings accounts and debit cards were being issued by
Sutton bank in Ohio which became available in early 2019(Salmony). It was announced that the
savings account would have an annual interest rate of 3.0% which was higher compared to the
2.36% being offered by licensed banks and also that SIPC would insure the reports, this all
changed later in the year after SIPC denied the insurance claims with FDIC together with other
partner banks taking up the insurance at an annual interest rate of 2.05%which was further
Robinhood, as a financial technology firm, offers users the chance of trading in stocks in
the United States without paying any commission or withdrawal fees. The mobile application by
the firm has a fully digital user-friendly interface giving users the ability to open accounts faster
without any hiccups. One of the cons is that services by Robinhood are only available in the
United States, and Australia and its customer care services are only available through email.
Even though the firm offers free trading in US stocks, the commission for trading on
stocks not from the United States stock market is pretty high. Robinhood only allows users from
the United States and Australia to open accounts, but there are plans by the firm to expand its
services to other continents(Foxman). The standard Robinhood account does not require a
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minimum balance, but this changes when a user upgrades to the Robinhood Gold account, where
While opening an account with Robinhood, one automatically opens an official statement
which can be upgraded to the Gold account or downgraded to a cash account. The Robinhood
Gold and standard accounts have a limitation of only three weekly day trades unless one has
$25000 and above in the account, while in the cash account, such restrictions are not there, and
users can make as many day trades as they want without a minimum account balance.
Depositing and withdrawing money from Robinhood accounts is quite easy and user-
friendly but they can only be made through bank transfers. If a user makes an instant deposit,
payment is instantly credited to his/her account, but if one does not do this, it can take up to 5
business days for the deposit to reflect in the account (Foxman). Even though the instant deposit
is immediately reflected it has its limitations. For the Robinhood standard account, the maximum
immediate deposit is $1000, while for the Gold account, it is $50000 with any amount above the
Withdrawing money from Robinhood accounts takes three business days, the accounts
have a withdrawal limit of $50,000 daily and cash deposited and not used in trading can only be
withdrawn after five business days. Withdrawals can also only be made to accounts registered
with the user’s name(Foxman). Transferring of stocks through Robinhood in and out of user
accounts is possible through the mobile platform, an incoming stock transfer is free while there is
After the mobile Robinhood platform, the firm introduced a web-based trading platform,
the major issue with the web-based platform is that it is available only in English. Even though it
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is in English, the platform has a great design, and user interface plus is easy to use but cannot be
In terms of safety and privacy of user data, users have to log in using their email
addresses and password, and the web application has an option of a two-step authentication
process. This is all good, but early in the year, the firm announced that its user’s passwords were
being stored in the readable, clear-text form in their internal systems. The firm, however, stated
that there was no evidence of any breach of user information and data.
Technology is changing from day to day ane society is becoming “mobile-first.” Robin
mobile up. This is in line with the new world and allows the company to grow.
Many people are interested in becoming investors but are hindered by the old mindset
despite having the necessary resources. The company is working towards changing
people’s mindsets and if it succeeds they will create a new age of investors for their
RobinHood is highly dependent on its investors for growth.If the investors cut them off,
they are bound to fail as they do not have a clearly defined revenue model.
As much as Robinhood’s competitors are considered to be slow and old, they are well-
Controversies
Even though the Financial technology firm has had a great run since it was launched it
has been faced with various issues such as a glitch in November 2019 that allowed users with
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Gold accounts unlimited access to the borrowing of funds to purchase stock. The glitch was
finally fixed, and affected accounts suspended. In another instance, there was a report from
Bloomberg News in 2018 that the firm got almost 50% of its revenue from order flow payments
(Bloomberg). This fact was confirmed by the firm on its website and ended it later in the year
Works Cited
Skan, J., Dickerson, J., & Masood, S. 2015. The future of fintech and banking: Digitally
Salmony, M., 2014. Access to accounts: Why banks should embrace an open future. Journal of
Foxman, Simone (October 16, 2018). "Robinhood Gets Almost Half Its Revenue in
Truong, Thi. "How the FinTech industry is changing the world." (2016).