Revolut has launched a commission-free stock trading service in a push to challenge major trading platforms and differentiate itself from rival banking start-ups such as Monzo and Starling Bank, according to Financial Times.
Customers who pay for its £12.99 monthly “metal” subscription service will be able to buy and sell US stocks from Thursday, while those who use the cheaper premium or free accounts will gain access to the service in the next few weeks.
André Mohamed, Revolut’s head of wealth and trading, said the company wanted to “democratise” access to investing, and criticised the high fees charged by incumbents.
Revolut’s free users will receive three free trades a month, and pay £1 per trade for further transactions. Premium subscribers — who pay £6.99 per month — will get eight free trades, while metal subscribers will get 100.
The app will have no minimum investment size, and will be the first European company to allow investors to buy fractions of shares.
Hargreaves Lansdown, the UK’s largest online trading platform, charges up to £11.95 per order, falling to £5.95 for the most frequent traders. Others, such as Interactive Investor, AJ Bell and Barclays, charge between £4.95 and £10 a trade.
“If you drill down into it, it definitely doesn’t cost £12 [to execute a trade]”, Mr Mohamed said. Revolut expects to make money mainly by encouraging users to sign up for its subscription services, but said the £1 charge for users who went over their monthly quota also “more than covers the cost — it’s not a loss leader for us”.
Revolut’s move is designed to bolster its efforts to build a “global digital bank”. The company initially specialised in cheap travel money, but has since expanded into cryptocurrency trading with a full banking licence in the eurozone and desire to gain similar licences in the UK and elsewhere.
Mr Mohamed said that the trading service would help to increase the average amount of money customers loaded on to the app, encourage them to log in more often and increase trust in the company.
Despite the company’s ambitious goals, the immediate threat to the likes of Hargreaves Lansdown will be limited by the Revolut’s small selection of investment options. It will initially only offer US stocks, with trades executed through a partnership with US clearing firm DriveWealth. Investments cannot be held within tax wrappers such as a stocks and shares Isa or a self-invested personal pension.
Revolut acknowledged that building the product had been more complicated and taken longer than initially hoped, but it plans to expand its features over time to include UK and European stocks, exchange traded funds and the ability to invest through an Isa.
Nik Storonsky, Revolut chief executive, said: “Investing in the stock market has been closed off to ordinary people for far too long, which has led to real problems for people as they search for effective ways to make the most of their savings.”
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