Disrupting Finance: A Look at the Robinhood App

Controlling your financial future?  There’s an app for that.  In advance of the April 21, 2015 VLAB event Fintech: Silicon Valley Takes On Wall Street, I experimented with Robinhood, who I first learned about months ago and signed up to be one of their first users.  Robinhood Co-Founder Baiju Prafulkumar Bhatt will participate on the VLAB panel; you can learn more about the upcoming event by clicking here.

Robinhood setup is a cinch! The account setup caused zero of the headaches associated with navigating other trading accounts.  Robinhood guides you through every step of the way, including what I would say is the trickest part-funding the account.  Robinhood also communicates to you automatically, keeping you appraised of what is going on during the transfer process.

You get an email when the transfer is initiated and completed and you are ready to begin trading:

RobinhoodTransferInitiated

RobinhoodReadyToTrade

What if someone gets my phone?  The Robinhood app locks every time your phone locks, anytime the app is closed and anytime you switch between apps.  As long as you use a unique pin and don’t share it, people are not going to be able to mess with your portfolio.

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The trading process is simple!  Simplicity, in the world of complex financial markets and decisions, is extremely important.  Those who want to take control of their trading experience don’t want to have passed the Series 7, they just want to trade.  Green when the stock is going up and red for when it goes down down, big numbers, and easily tapping and swiping for navigation all contribute to the simple experience. Robinhood, judging by their app design, cares about user experience.

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As for the actual trading, it was so easy to purchase stock you can almost do it without knowing you’ve done it. Robinhood sends you an email confirming the order whenever a purchase is made.  Here was my first purchase:

RobinhoodOrderExecuted

It is free to make trades!  Part of the barrier to entry in financial markets is account setup and fees for stock purchase and sale. With no fees, I was able to purchase stock in three different companies without paying a cent in fees.  This is huge for those who want to dabble in stock trading and avoid the costs associated with it.  It also means someone can purchase a single penny stock, see its value double, sell and not be in the hole because of fees. (Fees can range from as low as $5 to over $100 for a broker assisted trade and at that rate penny stock trading just isn’t an option.)

Professional Communication! Robinhood automatically sends you notifications when statements are available and you can access the statements right in the app.  The statements themselves are very similar to the professional trading statements I receive for other financial accounts, including all the lengthy disclosure paragraphs nobody ever reads.

RobinhoodEmailStatement

How has my experiment gone?  The market is volatile but as of about noon today I was up from $100 to $102.49.

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What would I like to see?  There is one thing I’d really like to have in the app, the ability to set rules for automatic sale and purchase of stock based on price changes.  Perhaps we’ll hear that feature is under development during next week’s panel discussion.

For those interested in learning more about Robinhood and other companies making a difference in the world of finance, join me at the April 21st event (tickets are still available here).

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