Unicorn stock-trading app Robinhood arrives in Europe to revolutionize investing. Here's why the company may be too late.

• Hot US stock-trading app Robinhood has finally arrived in the UK but with a bevy of challengers already in place it may have arrived too late.
• Rivals such as Freetrade and Revolut have already set up trading operations albeit neither has the customer numbers of the US startup.
• "We have experience entering a highly regulated and competitive space from our growth in the US," Robinhood co-CEO and cofounder Vlad Tenev said in an interview with Business Insider. "We don't feel like this market is well served at this point so we're excited to open our first international office here."
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Named for the wily bandit who steals from the rich and gives to the poor, Robinhood is making the move into the home of its literary namesake.

The $7.6 billion "fee-free" stock trading app is launching in the UK, after being approved by the UK's financial regulator. The startup, which has raised a whopping $862 million in venture capital backing, has undeniably changed the landscape for equities trading mostly by attracting elusive millennials to its platform.

UK users can now sign up for early access to Robinhood's platform which will likely launch officially in the first three months of 2020.

When live, customers will have access to more than 3,500 US and global stocks alongside investment news and advice with a minimum deposit of £1. Customers can also pay a monthly fee of $5 for the company's premium service, Robinhood Gold, which gives customers extras like additional research into companies.

Its biggest competitors, the incumbents, have responded since then. Major brokerages Charles Schwab and Fidelity have announced that customers will no longer pay fees to trade US stocks but the UK landscape is markedly different.

"We have experience entering a highly regulated and competitive space from our growth in the US," Robinhood co-CEO and cofounder Vlad Tenev said in an interview with Business Insider. "We don't feel like this market is well served at this point so we're excited to open our first international office here."

Public equity investment, and investment generally, in the UK is underwhelming. For many, a Hargreaves Lansdown or AJ Bell ISA might include a tracker fund or a long-term pension holding but retail investing is not yet widespread like it is in the US.

Robinhood will be hoping to change that. The UK has added some 2.2 million new retail investors since 2013 while the size of the UK investment market doubled to $500 billion assets under administration (AUA) between 2013-2017, according to the UK's financial regulator, the FCA.

But that's still a fraction of the numbers in the US, where around half of households own stocks.

To that effect, challenger bank Revolut started offering stock trading through its app this year while bona-fide competitor Freetrade has a ready-made alternative for UK investors and recently raised a Series A round. Other platforms like eToro will also be gearing up to prove that they are better products as another US giant crosses the Atlantic.

Revolut shares the same lead investor as Robinhood, Twitter-backer DST Global, adding some spice to their battle. Index Ventures also backs both startups.

Robinhood made waves in the US but doesn't have first-mover advantage in the UK

When Robinhood launched in the US it was a phenomenon. Everyday investors had to pay fees ranging from $5-10 per trade when the cost to the broker was minuscule by comparison. Thanks to its no-fee promise, Robinhood had half a million people on a waiting list before it even launched and now boasts user numbers as high as six million at last count.

But Robinhood won't have first-mover advantage in the UK. Rival Freetrade is gaining traction after large crowdfunding campaigns, while Revolut boasts millions of UK and international users.

"The launch of our commission-free trading service aligns with our overall strategy to build and one-stop shop that can handle your entire financial life," Andre Mohamed, head of trading and wealth at Revolut, told Business Insider. "By rolling this feature out to our customers, we've expanded the retail investing market and democratised access to an area which has been notoriously expensive, complicated and inaccessible for many people." Revolut claims to have 100,000 users on its trading platform since it launched the service.

But Robinhood is bullish on the prospect of disrupting another market.

"We have been focused on researching the customer in the UK," Robinhood's UK president Wander Rutgers told Business Insider in an interview. "There is a culture of saving so it's still early on in terms of getting people to invest money but we hope to change that culture. There are other services but it's very early competition and the majority of market is not investing yet."

In the time since Robinhood announced its plans to enter the UK, competitors have bulked up their offerings in an attempt to head off the approaching behemoth. Freetrade claims to have 70,000 users since it closed its waitlist six months ago and is set to launch products in Europe next year.

"We focus on building the best possible product, and we've seen explosive demand," said Adam Dodds, CEO at Freetrade when contacted by Business Insider. "Our mission is to get everyone investing, through building a zero-commission investment app with trust at its core."

While close to 50% of UK consumers would consider investing in stocks, only one in five have actually done so, per Finder data. This suggests there's a substantial gap in the market, and Robinhood's success in the US bodes well for its ability to draw in UK users, too.

"Our success has come from word of mouth praise from users and we hope that people in the UK will share us with their friends and family," Tenev said. "Our long term plan is to expand into more international markets and we feel confident that if we can crack the UK then we can replicate that elsewhere."

Robinhood has had warnings from international regulators

Like many fast-growth startups, Robinhood sought to disrupt a highly regulated industry with the "move fast and break things" playbook, only to learn that the rules are there for a reason and that breaking them has consequences.

The company was previously warned by regulators about the checking and savings accounts that it planned to offer. It was deemed that Robinhood's foray into banking services might not meet regulatory scrutiny but pressed ahead anyway. The company has faced criticism and rebuke for the rollout of its current account in the US as reported by Business Insider.

Recently, the company was under fire for so-called "unlimited leverage" which allowed some premium users to trade up to $1 million with just a $4,000 deposit, something the company has looked to stop, albeit belatedly.

"When we discovered abusive activity we restricted customer accounts and over the ensuing few days put in a permanent fix. Any time there is tech and software it's hard to make it perfect but we want to make it better," Robinhood's Tenev added.

Since approval by UK regulators in August, Robinhood UK has continued to build out its team in Europe from its office in London. Tenev commented that while Nottingham, home of Robinhood's fictional namesake, may have been a more fitting location it didn't meet the final cut for the company's UK operations.