3 Reasons why Robinhood represents the future
I have been using Robinhood app and Charles Schwab mobile app for quite some time now and couldn’t help but compare both in terms of use and stickiness.
Wearing my Product hat, I wanted to share 3 reasons why Robinhood represents the future:
- Avoid Information overload and create a simple yet brilliant UI: Robinhood started as a mobile app and you can feel it in the user interface. It’s simple to understand with minimal info to begin with. On the other hand, Charles Schwab app feels cluttered; it inundates you with multiple #s and repeating stock name along with symbol.
Charles Schwab app does an information overload that makes you feel that you know nothing vs Robinhood app makes you feel that you know it all, even if you don’t!
2. Make it free: Robinhood growth engine is powered by classic tech strategy — Make it free for customers and monetize the data.
Since its inception, Robinhood has not charged fee for any trading. It generates revenue by selling user generated trading data. Charles Schwab followed suite eventually and eliminated all trading fees in 2019, as that is the direction industry is headed.
3. Gamify to generate stickiness: Every company has a referral strategy and gives $ to sign-up a friend. Robinhood does it differently — it gives you and your friend a free stock ( $2 — $200 of worth) instead! This gets a customer using the app right away and gets you hooked. It uses notifications smartly to inform you of earning announcements, dividend payout, stock split and much more. It has AI powered chat with emojis to make you feel you are chatting your way through. Charles Schwab does nothing!
Apart from all of this factors that make Robinhood amazing, another one for me personally has been their podcast, Robinhood Snacks. Jack and Nick do a phenemeonal job in making complex market information simple enough to understand. I have probably listened to this podcast the most and learnt a lot along the way!
Even with all the great stuff Robinhood is doing, there is a lot to improve. All the aspects which make Robinhood an amazing platform also result in risky behavior. People with basic financial literacy can buy options and indulge in risky behavior by trading all the time. At time of app installation, it asks you basic Qs to gauge user’s financial knowledge. Rather than asking the first time user to rate their own financial knowledge, it might make more sense to ask series of Qs to advise them accordingly. Redirecting users to financial literacy courses available on MOOCs can help too!
As Robinhood’s mission is to “Democratize finance for all”, it will probably serve them better to strike the right balance between creating stickiness and encouraging responsible behavior!
Thanks Baiju and Vlad for create a wonderful financial platform!