Investment app Robinhood, which lets account holders trade securities without a fee, is more than prepared to compete with legacy financial service companies as they lower their trading commissions, said Vlad Tenev, co-CEO of the company at CB Insights’ Future of Fintech conference.
Robinhood, which said it has over 4 million brokerage accounts and periods of adding over 200,000 accounts in a day, isn’t worried about the legacy threat. “These companies aren’t really technology companies or engineering companies,” he said of brokerages like Schwab or Fidelity.
Valued at $5.6 billion in its most recent funding round, Robinhood operates at a compressed margin that’s enabled by technological efficiencies and automation, said Tenev, acknowledging that the company makes less money per person than its competitors.
He outlined a cycle of changes that those same companies would need to make to compete on price, which included eventually laying off employees to run a leaner company and doing a better job of attracting tech talent. He noted that the higher margins enabled by commission fees on trades mean there’s less pressure to create an efficient product.
Tenev also weighed in on cryptos. “We see that this asset has staying power,” he said, calling bitcoin prices “fractal” and adding it’s “foolish to say that bitcoin is done.”
Robinhood’s goal in offering crypto trading is to get customers to use the app, he said, noting that “exorbitant fees” had been the norm for most when trading crypto assets. He said the company is still working to get regulatory approval for crypto trading in some locations, like New York.