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US-based commission free trading app Robinhood has quietly begun recruiting for a new office in London in preparation for an eventual launch in the UK, reports TechCrunch.
The $5.6 billion fintech is hiring for multiple positions in the city, including recruitment, operations, and marketing, according to sources familiar with the matter cited by the outlet. It’s also reportedly seeking to fill compliance and product positions, suggesting the fintech’s strategy is focused on significant localization and product market fit for its UK expansion. Robinhood declined to comment on these plans, according to TechCrunch.
A UK launch would put the startup in competition with a number of local fintechs.Likely in part due to Robinhood’s success in the US, several new entrants in the UK have launched or announced their intention to launch fee-free trading services.
Freetrade, which launched last year and has obtained authorization from the UK’s Financial Conduct Authority (FCA), lets customers invest in UK stocks and exchange-traded funds (ETFs). The challenger broker has a similar freemium offering to Robinhood, where it offers investors fee-free services and fee-based offerings for more complex trading options.
Meanwhile, neobank Revolut, which shares a number of backers with Robinhood, announced in June 2018 its intention to add a trading service to its banking app. This means Robinhood will likely face stiff competition for customers when it eventually moves into the country, although the success and reputation it’s gained in the US could offset some of these challenges.
Expanding to the UK is a logical next step for Robinhood, especially considering its banking ambitions.At the end of last year, Robinhood attempted to bolster its core offerings with 3% interest-paying accounts in a bid to enter the banking segment.
However, it came under severe scrutiny for potentially misleading customers about the insurance those deposit offerings would be subject to. This misjudgment is likely to have been exacerbated by the fragmented regulatory scheme overseeing fintechs in the US.
In contrast, neobanks in the UK have had a much easier time as financial services regulation is centralized under the FCA, a progressive and innovation-friendly body. Robinhood’s move to the UK will allow it to target a new geography, but it could also help it to more easily obtain authorization to roll out banking services if it wanted to.
However, it would be wise to launch its expansion efforts before the likes of Revolut enter trading and grow their market share. Broadly, geographical expansion by the likes of Robinhood is further evidence of fintechs’ growing maturity — a worrying sign for incumbents that fail to take the disruptive threat posed by these tech-savvy startups seriously.