Stock Trading for the Touch-ID Era Has Finally Arrived

Robinhood

If you don’t trade stocks for a living, then making stocks easy to trade is a bad idea, right? Day-trading is legalized gambling, a fast lane to financial ruin. “Buy and hold” is the responsible way to play the market.

But somewhere along the way, the imperatives of responsible investing morphed into a conceptual separation of retail investors from their money, a divide reflected in the design of software for the everyday shareholder. Bloated with features and fees, stock trading even in the internet era put the markets at arm’s length and alienated a new generation from taking part.

That, at least, is the argument of the makers of Robinhood, an iOS app that is going live in the App Store on Thursday. Robinhood uses swipes and taps to make trading stocks feel more like checking your email. Available just on iPhones (for now), the app re-imagines the brokerage as a mobile-only enterprise that fits in your pocket, where you keep the rest of your money. Whether making trades as accessible as Facebook updates is a good idea or not, the era of Touch-ID trading has arrived.

“We think it’s not a particularly engaging activity for a lot of people,” Robinhood co-founder Baiju Bhatt says of investing in the stock market. That alienation afflicts people in their 20s especially, Bhatt says. “If people don’t think about their finances and get involved with building a financial trajectory early in life, it’s kind of a substantial problem.”

Stock trading in a few taps. Robinhood

Everyday Design

In its run-up to launch, Robinhood has amassed a waitlist of a half-million would-be users, according to Bhatt. He says the company hopes to work through the entire queue within two months, ticking through users much like Mailbox did last year.

The Robinhood team was also thinking about Mailbox a lot, Bhatt told WIRED, when it was designing the app’s flat, post-skeuomorphic, gesture-based interface with the aforementioned Touch ID login. Graphics are minimal, with an emphasis on charts and text, though in a spare, uncluttered way. The app’s background is black when markets are closed and white when they’re open.

But the app’s simplicity is meant to be about more than style. Ease of access and understanding is meant to make Robinhood compulsively engaging for a new generation of investors that don’t find the stock market very accessible from the mobile screens at the center of their lives. It took me five minutes to sign up for an account, including a simple username-and-password interface for linking my bank account—no blank checks or routing numbers. The only lag time so far is waiting for the money to transfer into my trading account, which could take up to three business days, according to the app. Accounts do not require a minimum balance.

“As soon as people made one trade, we saw that they became daily users of the app,” co-founder Vlad Tenev says of Robinhood’s beta testers. On average, they started opening the app an average of twenty times per week, he says. “It’s more similar to looking at your email or your Twitter than, say, a banking or finance app.”

The Robinhood app’s background is white when markets are open and black when they’re closed. Robinhood

Too-Easy Trades?

But is that a good thing? Encouraging impulse trading is only likely to alienate young investors from the stock market more as they find out the hard way chasing the market’s rises and falls is the quickest way to an empty brokerage account. But Tenev says encouraging involvement and encouraging actual trading aren’t the same thing. The average user, he says, makes three to four trades per month.

“It’s not that people are trading every day,” Tenev says. Rather, he says, people are mostly checking their balances and exploring stocks. “They’re just becoming more engaged with the product, not necessarily becoming day traders.”

Because Robinhood doesn’t charge per-trade commissions or fees, its co-founders say, the company has no financial incentive to encourage users to buy and sell irresponsibly. Instead, the company expects to make money by earning interest on margin trading and collecting interest on cash balances, much like a regular bank. As the product develops over time, Bhatt says Robinhood will include features inspired by behavioral economics to nudge users toward smarter ways of managing their money.

But more important than teaching, he says, is letting new entrants to the market learn for themselves, to feel like their money is their own to use, move, and manage. “There’s just something very, very satisfying feeling like I have my investments right there in my pocket.”