But, Robinhood’s day in the sun has already begun to cloud. After building its reputation on “democratizing trading,” the platform came under suspicion as users caught whiff its loyalties might lay with Wall Street after all.
In December 2020, the SEC filed charges against Robinhood for misleading customers and failing its duty of best execution. The charges stem from the app’s “payment for flow order” (PFOF) profit model, which sells user trade requests to market-makers like Citadel Capital—meaning Robinhood works to find the best deals for hedge funds at the expense of its users. In February of 2021, representatives of the House Financial Services Committee pilloried Robinhood CEO Vlad Tenev for failing to protect retail investors and gamifying trading.
Things came to a head during the GameStop meme-trading frenzy when Robinhood abruptly halted trading on the stock. The move struck some as a deliberate attempt to protect Citadel Capital—one of Robinhood’s largest clients and a short-seller of GameStop—sparking another SEC investigation.
Javier Jean Youth
Looking to cash in on millennial distrust of banks and financiers (think: Occupy Wall Street, Bernie Sanders, Wolf of Wall Street), fintech brands are practicing applied empathy and positioning themselves as allies disrupting a frustrating, exclusionary, and even corrupt industry. Their brands follow suit, stressing accessibility and approachability: fee-free trading, easy-to-use interfaces, and jargon-less copy. Below, SSR investigates how fintech apps are differentiating themselves as the banking, loans, and investment option for millennials.
- Robinhood (“Democratize Finance”)
What critics call gamifying trading, Robinhood would call giving everyone a piece of the Wall Street pie. Their social media content emphasizes relatable users’ personal investing success stories. A 30-second Super Bowl spot (“We’re All Investors”) ran folksy vignettes of everyday life in small-town America: babies in cribs, corner stores clerks, country bars. It closes with a millennial making a trade as she waits for her coffee in a diner. Not a central business district or stock chart insight.
- SoFi (“Don’t Bank. SoFi”)
Empathizing with young professionals struggling to cut through the noise and make smart financial choices, this loan startup is pushing the message that Millennials know better than to go to a traditional bank. Advertisement messages include ones to refinance (“refi”) student loans, get paychecks “two days early,” take out a mortgage because “you’re too smart to rent.” Channeling Jenny Holzer, one ad projects the words “Even banks don’t want to be banks” onto—yes—a bank.
- Invstr (“Invest Smarter”)
What Robinhood is to /r/wallstreetbets, Invstr wants to be to /r/investing. “Don’t be stonks guy!” instructs one of their ads. The trading is fee-free like Robinhood’s, but tools like their Fantasy Investing platform (where users trade with mock money) and social media campaigns like Teach Tuesdays stress learning the ropes before jumping in. More DD, less YOLO.
- Acorns (“Invest, Earn, Grow, Spend, Later”)
Acorns differentiates itself on a unique service offering: just sign up and your spare change is automatically invested for you. Endorsements from Dwayne ‘The Rock’ Johnson and Danny Garcia play the rags-to-riches angle, and inspirational quotes on social media ride the #hustleculture wave.
- Kraken (‘Bitcoin & Cryptocurrency Exchange)
A platform specializing in cryptocurrency trading, dressed in cyberpunk visuals. The messaging stresses the availability of new crypto-tokens, easy-to-use interface, and low barriers to entry (“Get started with as little as $10”).
- Public (‘The Investing Social Network’)
Public positions themselves as foils to Robinhood, looking to empathize with those who lost faith in the startup after a summer of controversy. They made hay of Robinhood’s SEC charges by dropping PFOF as a profit model, and are emphasizing transparency (website portals like “How does Public Make Money?”), community (you can follow other investors), and learning (long list of articles on their website, including several on the volatility of meme stocks).