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British digital banking startup Revolut launches app-based US trading platform

By Arghyadeep on Jan 19, 2022 | 04:39 AM IST

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• Shares of Robinhood and Charles Schwab fell after Revolut announced the trading app

• Revolut said nothing “would look or feel like gamification” in the app

London-based fintech and digital bank Revolut launched commission-free app-based stock trading in the United States on Wednesday, in a move that will court the younger generation and compete against Robinhood Markets Inc (NASDAQ: HOOD) and Charles Schwab Corp (NYSE: SCHW).

The move comes amid a massive surge in retail trading, which intensified last year when investors shorted the so-called “meme stocks” like GameStop Corp (NYSE: GME) and AMC Entertainment Holdings Inc (NYSE: AMC).

Data from Vanda Research shows retail traders in the U.S. have bought about $281 billion worth of stocks in 2021, a jump of more than sixfolds from 2019.

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U.S. Revolut customers will be able to trade on over 1,100 securities listed on the New York Stock Exchange and Nasdaq, including more than 200 exchange-traded funds.

Revolut super-app

In March 2020, Revolut launched its banking app service in the U.S., and last September, it secured a U.S. broker-dealer license.

The startup, which already offers payments services, cryptocurrency trading, and savings accounts, is aiming to become a financial “super-app,” where consumers can manage every aspect of their finances, the company said.

“This to us was just the next logical step,” said Gabe Vallejo, Revolut’s U.S. head of wealth and trading.

Founded in 2015, Revolut was valued at $33 billion through an investment round in July and is currently UK’s second-most valuable fintech company after Checkout.com, which has been valued at $40 billion last week.

Gamification of trading

However, the boom in retail trading since the pandemic and the Reddit-Gamestop fiasco has raised regulatory scrutiny, with Securities and Exchange Commission Chair Gary Gensler looking into how mobile trading apps are hooking their customers by “gamify” -ing investing.

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“We don’t want to promote irresponsible investing,” said Vallejo. “We made sure to have nothing that would look or feel like gamification in our app.”

“We’re confident we can continue to offer this product to our customers in the most efficient manner possible,” he said.

Picture Credit: Yahoo finance

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