The Rise of Wealth Management Technology

Stock trading has traditionally been available only to the select few who could afford it. However, recent innovations have led to the expansion of this target market. A pioneer in popularising the mainstream use of stock trading is Robinhood in the USA. Along with others in the industry, Robinhood has helped lower barriers such as fees, complexity and minimum investments so that the average person can start trading stocks. You can check out Robinhood’s offering here.

Revolut’s Stock Trading Feature – The Details

FinTech Startup Revolut has just made a push into the nascent WealthTech sector by adding commission-free stock trading to its array of offerings. Currently the stock trading feature is only available for Revolut’s metal users, who pay €13.99 a month. However, these clients also have access to: 5 cryptocurrencies, a variety of ultra-flexible insurance packages, ‘disposable virtual cards’ (one-use card details for online shopping), cashback, exclusive discounts at restaurants and more.

In the coming months Revolut will roll out this feature to its other memberships. Pricing for the service consists of an extremely low flat fee of 0.01%. Users also get a set number of free trades, then once this limit is passed, it costs £1 per trade. Revolut’s free users will soon receive 3 free trades a month. Premium subscribers who pay €7.99 a month, will get 8 free trades, whilst metal members will get 100. The app doesn’t have a minimum investment size. Therefore you can buy €1 worth of Amazon shares if that’s all you want to risk. This means that Revolut is the first European company to allow customers to buy fractions of shares.

One setback is that there are currently only 300 US-listed stocks available on Revolut’s trading platform. However, this is merely because it is a new feature. Revolut is planning to include European stocks as well as ETFs in the near future. Revolut stated that they mainly expect to make money by onboarding more customers onto their paid subscriptions. Furthermore, they said that the £1 charge per trade, for clients that run out of free ones, “more than covers the cost, [meaning] it’s not a loss leader”.

Competitors

Revolut’s push into the stock-trading market puts them in competition with other European startups such as Freetrade & BUX, plus incumbents like Hargreaves Lansdown & Interactive Investor. Prices from the incumbents’ offerings are around €6-€13 per trade. Prices set by the startups are much cheaper… Freetrade offers free ‘basic order’ trades, however these are shares that will only be bought and sold at the 4pm price. Instant trades are processed at the same price of the transaction, these cost £1 each. Whereas BUX charges a maximum of €0.8 + 0.2% per trade depending on what is being traded.

“Investing in the stock market has been closed off to ordinary people for far too long. This leads to real problems for people as they search for effective ways to make the most of their savings.” – Nik Storonsky, Revolut chief executive

Revolut is attempting to ‘democratise’ the access to investing, stating that fees charged by incumbents are unreasonably high. Behind the scenes they have been working with DriveWealth in order to launch this feature. It is all part of Revolut’s plan to become a global digital bank. Their strategy of endlessly expanding their offering has placed Revolut at an interesting position. Revolut currently has over 6m users. When it comes to total users, this puts them in 1st place in the FinTech startup race. N26 is closely behind with around 4m users, however they have a higher valuation ($3.5bn). N26 recently secured $170m in their Series D Extension – you can read more about that in our previous post. Whereas Revolut is yet to go through with their Series D. However, it is reported that they are hoping to raise a further $500m in the coming months. This would give them a valuation of around $5bn… The question still remains – will Revolut remain ahead of its competitors for long?..