Robinhood and the Challenging European Fintech Market

Robinhood, the very famous zero-commission online trading startup launched in 2013 which was listed at a value of $32 billion in 2021, is trying to enter the English market for the third time.

Robinhood’s adventures in the UK got off to a false start in 2020, where the fintech startup had acquired a waiting list of over 250,000 people which it then had to drastically cancel saying it needed to focus on the local market. Then in 2022 it canceled its acquisition of UK-based cryptocurrency trading platform Ziglu, which would have helped it get all the necessary approvals and a base in the country.

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Robinhood encountered several problems in its attempt to conquer the European fintech market

At the end of 2023 the app once again announced its desire to cross the ocean, launching a new waiting list to gather potential customers in the United Kingdom. It then also launched a version of the app in the European market for exclusive cryptocurrency trading. To announce this latest UK launch, the company has chosen to place a statue of the English hero named after him – who famously stole from the rich to give to the poor – in the City of London.

The problem is that since 2020 a large number of European startups have been created and grown with the same services and which actually manage to satisfy English and European customers better because they have access to local markets, not just American ones.

Robinhood’s competitor, Public, which arrived from the United States last year, is already withdrawing from the market, after understanding that the European continent is a set of very different countries with different currencies, different subsidized financial solutions for each country and also investment preferences on local shareholders.

Furthermore, the fintech market has changed a lot since 2020 where people became passionate about investments during the pandemic, forced to stay at home all day. Retail investors have slowed their enthusiasm for these solutions, perhaps also realizing that investing is a complicated job and that making money quickly by trading is difficult in a volatile market like the recent one. Robinhood’s competitors in Europe such as Bux and FreeTrade have lost 86% and 43% of the volumes they had during the pandemic respectively.

In this scenario it will be difficult for the Robinhood startup to excel but we will see if it will find an effective channel to reach new customers. In the meantime, this example demonstrates how managing to become an international startup is a very complicated job that requires a huge investment, knowledge of the market and adaptation to local regulations. And if it is already difficult for any startup, for fintech startups, where the rules are fragmented in every single market, it is truly a challenge.

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(Featured image by pierre9x6 via Pixabay)

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First published in la Repubblica. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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