Revolut’s Competitive Nature
The competitive market for commission free trading has begun in the digital currency space. The rate of firms providing this new trading format is similar to the boom seen in the early 2000s with the rise of the internet. The number of people participating in commission-free trading is substantial, with Robin Hood’s clients amassing past five million. Their valuation is listed at $7 Billion, which is estimated to increase in the coming months with their approval to operate in the United Kingdom. Robinhood will now be competing against the likes or EToro and Revolut, who both offer commission-free trading. Robin Hoods actual competition is Revolut, who holds 7.5 Million customers to date. When the London, England establishing banking institution announced commission-free trading in July, their services have a rapid jump in popularity. Furthermore, Revolut is the only European firm to provide commission-free services through its mobile application. Having the capability to trade equities without any associated trade cost was initially meant to be a limited release but has become permanent with Revolut’s trading services.
The Head of Wealth & Trading at Revolut was questioned last week on the upcoming products coming to their desktop and mobile platforms. Andre Mohamed joined Revolut in December 2018; his previous accomplishments include being the co-founder of Freetrade. During the interview, Mohamed was asked about the company’s growth and competitive nature in the growing market. From all accounts, this young executive is up to the formidable task of defeating eToro and Robinhood.
Andre Mohamed was first asked why his new employer added in the stock trading service. His answer indicated that this is a natural step forward for Revolut and that it’s an integral part of their mission to become the ultimate brokerage in the United Kingdom. Naturally, the next question asked to Andre was why Revolut would then partner with the American firm, DriveWealth. Revolut polled all of their 7.5 Million clientele on how the US Markets should be approached, especially in an era where stocks are considerably higher than average. Revolut believes that selling percentages of shares enable European clients to purchase US Stocks more frequently. This method was first implemented by DriveWealth to provide reliable trading services that have lower associated costs, with market movements accounted for in the prices. Revolut adopting this same technology will be beneficial for clients, and DriveWealth is the most attractive firm to partner within the United States for Revolut. There is now a happy medium for the 7.5 Million Revolut users wanting to engage with US Stocks.
The onslaught of questions for Andre Mohamed continued when reporters asked him if Revolut would work with any other firms in different markets for a more global presence. Surprisingly, Mohammed revealed that Revolut is looking into multiple markets on a worldwide scale and will engage different business strategies for each market. This could mean global traders could have access to the low custody fees and one hundred free trades a month provided by Revolut. These incredible features are only enabled because of the subscription model implemented with Revolut, which is now becoming the norm industry-wide. Revolut was the first to implement the Netflix Business Model, giving Premium users exclusive benefits and perks. These perks include the 100 Free Monthly Trades, Lower Commission Fees, Larger Pairing Selections and Faster Processing of Payments. Revolut earns this monthly revenue from this subscription model, which is used by millions of their daily clientele.
Revolut also estimates that they will earn substantial sums of money through stock trading, which will cause an increase of users registering for the Premium Subscription method. However, there is also the Metal Subscription, which has a limited selection of options available to traders. Those serious about digital currency trading are recommended to subscribe to the premium model, which enables unlimited commission-free trades.
Andre was also questioned about the growing competition in the European Market. Brokerage firms like Freetrade, Robinhood, Stake and EToro, have begun to provide identical services to their clientele. Right now Revolut is winning the race, but as the market heats up, there’s a chance another brokerage firm could take their 1st place position. However, Mohamed determines that the growing number of ecosystems supported through Revoluts platform will create a monopoly umbrella for digital financial services.
Additionally, the simplified trading features enacted through their trading platform is more direct than their competitors. Finally, these other brokerage firms don’t operate a mobile rendition of commission-free trading. This is the most significant factor in separating these five firms.
After Freetrade was mentioned, Andre Mohammed was asked why he left the corporation that he founded. Andre said that when he left his company, he was looking for additional investment opportunities that fell more in line with his capabilities. The forced changes at Freetrade from the ESMA’s product intervention measures caused Andre to no longer find the passion of trading with his founded firm. This is what prompted the young entrepreneur to chance his employment from Freetrade to Revolut.
Andre Mohammed kept the conversation moving forward, speaking about how the transition from a small startup to the giant corporation was considerably different. He also spoke about the cultural difference between the two competing brokers. His comments reflected that when he joined Revolut, only a few hundred individuals were working with the company. Since then, there has been a substantial increase in employment at Revolut. However, when Andre first arrived, it felt somewhat similar to his startup. The considerable change was the open cultural atmosphere, which prompted individual employees to become more ambitious and driven. This was shocking for the young executive, who always struggled with enthusiastic employees at Free Trade.
Multiple retail investment brokerages are working towards commission-free trading in the European Union and the United States. Revolut is in a unique position with large numbers of clientele, which potentially could create a monopoly effect in the market. This could mean that Revolut’s platform could become the equivalent of the New York Stock Exchange for the digital currency space.