1081. Insights: The future of Robinhood. A conversation with UK President Jordan Sinclair

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1:10Hello and welcome to FinTech Insider Insights. I'm Benjamin Ensor, Director of Research and Strategy at 11FS. And today I'm delighted to be joined by Jordan Sinclair, President of Robinhood UK. Okay. Robinhood has spent the past decade redefining retail investing, making financial markets more accessible to millions of customers in the United States, and more recently elsewhere in the world. Last week, the company unveiled what may be its boldest vision yet. At its latest product event, Robinhood announced a wave of launches centered around its vision for borderless markets, from tokenized US stocks and ETFs and Robinhood chain, to a broader push into AI-powered investing and agentic products.

1:51It's a bold bet that the future of finance won't be just digital, it'll be tokenized, intelligent and increasingly autonomous. So today we're going to unpack what these announcements mean, whether tokenization is finally having its moment and what happens when AI moves from helping us make decisions to acting on our behalf. So I'm absolutely delighted to welcome you Jordan. Thank you so much for joining us. How are you doing? Thanks for having me. I'm good. A little bit hot in London. We were reminiscing on a, it should be on a beach in Cape Town, but. Indeed. Things are as they are. It's a sentence you rarely hear.

2:26It's a little bit hot in London, but it's nice to hear it. So, as I mentioned, a huge big product launch from Robinhood. What's the sort of overarching vision behind borderless markets to the extent it's not embedded in that phrase? Yeah, you mentioned that we started in the US and that is the genesis of Robin Hood, but our ambition has always been global. So we set that out on three arcs over three timelines to build, to become the number one in active traders, number one in wallet share, and over a slightly longer horizon to build a global financial ecosystem. We now have almost 28 million customers, over a million customers outside the US, almost 27 million customers in the US.

3:08And what you're seeing is kind of the culmination of that vision in two parts. Here in the UK, we have our brokerage business and we have a crypto business through our acquisition of Bitstamp. In the EU, we have a crypto business and the acquisition of Bitstamp there, which gave us access to over 50 markets. What you're seeing is the technology that crypto provides and how do we use that to almost rebuild the infrastructure of the market as if we started today, rather than perhaps how it is. And probably that is the reason why some markets haven't achieved kind of high equity, participation, or access to stocks, where it is quite simple in the U.S.

3:46So it was exciting for us to announce that here in London. A lot of excitement with our customers, with our partners, with our teams. We have Vlad, our group CEO here at Greenwich at the Royal Navy College. So, I mean, that's a great way for us to kind of tell the world that we aren't just a U.S.-based business anymore. We do see this as Robinhood being accessible to everyone. And tokenization is often a term I think we hear a lot. I think in the UK particularly, it's often a PowerPoint slide term or people talk about it as the future. We're a firm that's actually done it. I think that is a differentiator in today's world.

4:21We already had launched our classic stock token product in the EU, which gave customers access to almost 2 ,000 US stocks and ETFs. And we announced our intention to launch the Robinhood chain and launch it from a mainnet perspective. We've actually done that now. And I think that does just show how quickly we move, but also our commitment to building the future at the same time as providing the best customer service and products that we can in today's world as well as the future. I must say it's nice that Robinhood is now in the UK because it always felt like a tiny bit of cultural appropriation that the company was named after a sort of English folk hero.

5:00So it's good that you are now a British company as well as an American one. Sadly, I don't know if you saw Major Oak, actually the large tree passed away. I didn't see that. So even though in American company that was news that was felt across the organization. So tell us a little bit more about tokenization. I mean, what does tokenization enable Robinhood to do for its customers that you couldn't do without it? So for people who are not sort of familiar with security settlement, how does tokenization create efficiencies for you or for your customers? If you think about the world we live in today, news is 24-7, markets are moving, customers are engaged in the markets.

5:41But the traditional setup of brokerage in particular is still somewhat antiquated in that if you buy a stock today or you sell a stock, your settlement time is not instant. which in a world of instant payments, instant everything, seems a bit crazy that if you sell a stock on Friday, you actually have to wait for the whole weekend to pass. And imagine if Monday is a public holiday, you have to wait even further. So tokenization provides instant settlement. The other side of it is 24-7. We have a seven-day week and yet markets only trade five days a week. But we know that there are market-moving news events and there are things that actually are tradable on the weekends.

6:20It's just we don't have a system to provide that access to customers. And I think crypto is a great way where you could see retail driving that market where retail wanted access to a 24-7 product. And the ability also to move your asset and use it somewhere else. Today, in the traditional world, you buy Apple and you hold it in your brokerage account. There's not much you can actually do with that Apple stock. Can you borrow against it and go do something with it that private banking clients have the access to through Lombard Lending, through their portfolio, but the average retail customer doesn't.

6:52Can you move it into a wallet and send it to someone else? Can you use it in defile as collateral or in yield? All those are limitations of the current system. So I think tokenization removes some of those barriers, but I think what it opens up is new markets. Public equities continues to grow and participation continues to grow. But private markets, and you think of real estate, to think of our private companies like Anthropic and OpenAI, where retail can't get access to these wealth creation vehicles, but those in VCs or private wealth investors or the wealthy can. And they can get in at 100 billion.

7:34And when these companies list, they're a trillion and retail now has to hope they get to 10 trillion in order to make the equivalent. So I think that's for tokenization opens up. And I think that's really what you're going to see is a rewriting of how traditional markets work. And there'll be a period of time where they're going to run in parallel. I think that's absolutely fine. But also opening up markets that currently we can't access. So view tokenization is as much about enabling retail investors to invest in new private market assets as it is about increasing trading or speeding up trading settlement.

8:08I think it gives you both, right? I think it's doing something better than it's done today and then giving customers something new. And the ability to fractionalize a large private investment. There is price discovery now more and more in terms of secondaries and these companies are staying private for longer. That does open up an ability for customers to own this asset. But tokenization actually provides the mechanism and technology for it to work. And then you think about the vehicles, a wallet that a customer can actually hold and decide what to do with that ownership. I think ownership is that important word that we really do see as a theme is giving customers the ability to have choice, to have access, and then to own a piece of the economy that isn't restricted to public equities.

8:52So if they own a token, does that actually give them the legal title to the underlying asset? Or does somebody else still hold the title to the underlying asset? So the stock tokens we've launched now, which give access to US stocks, and that is backed one-to-one, which does give customers a right to the underlying collateral. We're working on making that redeemable in future. That is what we ultimately see is what customers want, and that's also for our institutional partners. So we'll start with institutional partners in terms of redeemability for the actual underlying. But I think it's important for customers with this product to know in a hypothetical scenario, if Robinhood was to go bankrupt, I think at 300 billion plus assets under management, I think we're okay, but you've got to think about this and you've got to think about customers.

9:37Customers are very cautious in who they use their money with. Trust is important, protections, regulation. So that's an important part of this. So we're continuing to build out this product. Yeah, because obviously we've had many situations in the past where investors have got caught out because they're holding a derivative that actually doesn't give them title to some of the underlying assets. So let's talk about Robinhood's expansion internationally in the UK and elsewhere. So you launched in the UK, I think, sort of at the end of 2023, beginning of 2024. You sort of did a slow rollout and so on.

10:14as a South African how much fun do you have sort of talking to your colleagues in the States about some of the differences between investors in the UK investors elsewhere in Europe and American investors because the behavior isn't the same right? Customers are definitely not the same and I think we have a lot of fun in our office we have more nationalities than probably the World Cup at the moment in our office and there's some strong opinions I think one benefit of the extended World Cup format is that everyone in our office I think is actually represented this year which is fun but I think that's the most important bit is to recognize that customers aren't the same in each market and you have to spend time with them and you have to understand what their needs are.

10:53A US customer and a UK customer aren't the same but that doesn't mean you can't adapt your product in a way that meets their needs and that's exactly how we started building this business. It's our first market outside the US we spend a lot of time with UK customers and understand their pain points. Why is it so hard to buy US stock in the UK? why are you paying 12 pounds a trade on the incumbent platform? Why is pricing 15 minutes delayed on most platforms? Why do ISIS come with a fee when it's just an account giving customers tax-free investing? Why are FX fees so high? I think a big thing for UK customers is why do we have to wait for the market to open?

11:31Why can't we trade 24-5? These were basic needs of a UK customer where if you had to flip that to the US customer, not really thinking about FX fees, they're trading in dollars. their market, they have a slightly different consideration on time zones, East Coast, West Coast. So we started there, and that was a proof point that we found from our customers. We've made it easier and better, and we do see ourselves as the best place to trade the US market. But what else do UK customers need? They need local account types. ISAs and SIPs are great products in order to invest tax efficiently. And for the long term, we actually give customers 2 % back on their contributions to an ISA, where we found this to be...

12:09What do you mean by 2 %? So we found this is hugely kind of transformative in customer behavior where we actually reward customers for investing. If you contribute to your stocks and shares ISO with your 20 grand a year allowance, which when I tell my US colleagues, we get 20 grand a year to invest tax-free. They think that's an amazing product. So sometimes maybe we don't shout out about that enough in the UK. I mean, that's a fantastic product, right? It's going away, but yes. But go down. Well, stocks and shares ISO limits are still staying in 20. cash is lower. But I think that's it, right?

12:42And I've spent a lot of time on steering committees with the chancellor and policy and regulators around how do we fix risk warnings to make it more understandable for customers to start investing? And how do we get customers more educated about investing? So when they have a choice of investing in cash and earning a low interest rate that's eroded by inflation or investing in a stocks and shares ISA, whether it's ours or someone else's what can that grow to over time to help to meet those same goals and come back to your point on different customer trends and aspects i think education is a bigger gap here than it is in the u.s here your household wealth and equities is around 20 percent in the u.s it's growing to around 60 percent and our goal is that actually it should be 100 percent we recently launched trump accounts in the u.s together with treasury and bank of new york where children at birth are given access to an investment account that will grow over time.

13:38And the UK has got a lot of those same mechanisms, the junior ISA, the ISA landscape. It's just either making things happen by default in terms of behavior or changing behavior. And I think education and incentives can do that. So the UK has long had this gap compared with markets elsewhere in the world where there are just fewer people in Britain investing in the markets than you see, certainly in the States, but also in many other markets in Europe. What's your view on that? The UK customers are great savers, but we're not the best investors. And that's not necessarily a problem, it's an opportunity.

14:14But when we look at the UK statistics, I think it's roughly 20 % household wealth is in equities, where the number in the US is closer to 35, 40. And we don't necessarily need to be the U.S., but I think what we need to improve is participation. I think over time that will change. And we think about the U.S. where now they've just launched Trump accounts, where basically all children are given an investing account at birth and equity participation in terms of allocation of household wealth, but also just in terms of equity participation and actually investing. The goal there is actually to eventually get to 100%.

14:51And I think that's where the UK, it's an ambition, but getting people started, finding mechanisms to get them started, helping customers understand junior ISIS, helping customers understand the benefits of long-term investing, better education. It's something we offer in terms of a 2 % match where we incentivize customers to invest and reward them for investing behavior. Equally reminding customers why cash has a place, and it actually does in a portfolio. but what is inflation doing to that cash? So I think in the UK, we see it as a really big opportunity where historically access has been tricky, it's been expensive.

15:29We have a lot of research where customers have felt like investing isn't for them. It's almost a reward for being wealthy rather than just someone wants to buy a house. And when we talk to our US customers and our UK customers and EU and even people in South Africa at home, the goals are exactly the same. I want to save for retirement, I want to buy a house, I want to say for school fees, medical fees, family members. How they get there, though, is very different. In the U.S., that traditionally has been the route of, well, the S &P 500 may be my route again to buy my house over time, where here it's what's the Bank of England paying as a base rate, and I'm going to leave it in my cash ISA.

16:06And you can imagine over 20 years, which customer gets there first. So I think there's a great opportunity in terms of education. I think there's a lot of the right ingredients. There's a good push from regulators, treasury, government, private firms. We have the Chancellor's Retail Investment Campaign, risk-warning reviews, advice guidance from the FCA as well. All these things to help people start investing. So I think it's going to take us some time, but we'll get there. Thank you. But let's talk about AI because Robinhood has been quite a relatively fast mover in AI, rolling out Robinhood Cortex.

16:45because I can't remember when you launched it, it was like a year and a half back. Can you tell us a little bit about how that's going, how your investors are using it, what's starting to happen differently in sort of your customers' behavior because of Cortex? I mean, personally, it's a product I love. I use it a lot, our customers use it a lot. And what we're doing is helping customers understand why a stock moved. And that's often been a disconnect to build confidence in the market is, I'm interested in Apple, I've been following the news, the stock price just went down today or it went up today, and I don't know why.

17:22What Cortex helps is the customer to understand what's driven that movement. Was it an analyst put out a research report with a new price target? Were sales done in China? Were memory costs increased and Apple changed their prices? Those are the types of things where cumulatively can move a price. But does a retail customer have the ability to put all those data together? That's what we put in-app on the stock detail page that gives that customer that information. It's not asking them to trade. It's not asking them to buy or sell. It's just helping them understand why their portfolio is moving.

17:59So we do see a lot of power in the AI tool and Cortex continue to grow where it'll give customers almost that bridge between I want to get started, I can't or I don't, I can't afford or I don't know where to go for advice and I need some help. And I think AI is a huge capability to bridge that divide in the UK where it's probably a large gap between education and confidence. How far will that help go? How far do you think you'll go down the path of AI? Because realistically, AI now can probably manage a stock portfolio far better than I can and probably far better than many customers can. I mean, how far down that path do you go and how do you sort of manage the risks and the challenges in them?

18:45I think you do have to marry the two risks and the benefits and it's like our agentic trading offering where we make sure that customers can get access to what institutional investors have had for a long time, algorithmic trading and AI supported trading, but with a human level where you can dictate what the agent has access to in terms of a segregated account, whether the agent actually can make trades on your behalf, making it clear in terms of risk disclosure, education, being able to turn it off if you no longer want it. I think all of that and also considering which of your customer set is it right for.

19:22I do think it's an important part of these products, but that's probably a range of energetic trading tool connected to your Claude or your model of choice, I guess, MCP, and making that understandable and a journey that's quite easy. And on the other side, it's just I want to understand why the market's moving. I think there is a scale where today, though, on both of those decisions or choices, customers in the UK don't have either. And the access to advice is very expensive. I think there was an FCA report in 2022, 2023, where 80 % of customers got advice. Which is crazy. It's a huge risk. We need to be thinking about our financial lives, building up an estate, as you said, thinking about the long term.

20:08But there aren't necessarily those tools out there for customers to do. And the regulators have done a great job here too. We look at advice, guidance, and targeted support. And again, with the AI review at the same time, thinking about risk warnings. What you've got is kind of a progressive regulatory roadmap that supports the progressive technologies that are moving always at pace. And I think that's a tough job to try and do both at the same time. But I think there's a strong recognition and has been probably the last three years in the UK where everyone is supportive of more people investing is good for Britain.

20:44Doing that in the right way is good for customers. How do we do that together? So I think we're on the right track. It does like investing, take time. And I think we can often fall into a trap of wanting to show results after year one. But just like investing time in market and you look at FTSE and S &P returns over time, I think you'll see exactly the same in the UK in terms of participation. So a cheeky question just before we come to a break. You're president of Robinhood UK. You're right that more investing in UK assets is good for the UK. But at the moment, Robinhood doesn't offer access to UK equities.

21:19Presumably that's something that will change at some point. there's no news on when that might That's definitely top of mind for us we hear from our customers at our event this week I know some of our customers were chatting to Vlad and telling him exactly the same thing and we hear that and we always do build up products for UK customers and with their demands in mind So yes, it's definitely So it's coming but there's no date yet? No date yet, but we hear you Well, it's been exciting hearing about the products you have launched and the things you're doing to try and help people invest. So we'll take a very quick break and then we'll come back and we will zoom out and explore what this means for the future of financial services.

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23:01Welcome back to FinTech Insider Insights, where I'm in conversation with Jordan Sinclair, president of Robinhood UK. Before the break, we explored Robinhood's latest announcements and the thinking behind borderless markets, Robinhood chain, and the company's vision for AI-powered investing. Now let's zoom out and think about where financial services goes from here. Robinhood's never been afraid to sort of challenge industry norms. You're sort of one of the firms perhaps most willing to disrupt. Whether that's a good thing or a bad thing is a different conversation. What do you think is sort of comes next?

23:39What are some of the next sort of assumptions, conventional wisdoms that need to be sort of broken or challenged? You know, where's the sort of bad boy in you going to go sort of next and sort of push back on and try and improve? I don't necessarily think of it from a bad boy or disruptive perspective, but more of how do we give customers access to what institutional customers have had for years? And that divide was historically far too great. We've certainly helped bring it closer, but we see even more opportunity for a level playing field. And I think you saw with the rise of crypto, it was very retail driven where customers now had access to something and they wanted 24-7 and they saw it as a market that gave them an opportunity that perhaps the traditional markets didn't.

24:25I think private markets is where you see the same thing happening where, and it's highlighted by I think the likes of SpaceX and Anthropic and OpenAI. And I think some of the news around AI in general is there are a few people that are benefiting from this great wealth accumulation of what is an incredible technology. But how do retail customers share in that wealth? And I think when you're looking at some of these models and what they're achieving, if you're a retail customer and you say, well, where's my, what's in it for me? You look really gets the crux of it and it's ownership. That's what we see is the probably disruption that tokenization can help achieve is you give customers access to markets that traditionally either retail has been excluded from, locked out, or legacy infrastructure just doesn't support it.

25:14So that's what we've started with. I think what you see now is the Robinhood chain is an infrastructure built for tokenization of real world assets, built for a world of AI, built for a world of DeFi. Others have launch chains, right? I think you see some news headline and that's okay. But what we built for was fit for purpose and then launched products which bring the two worlds together. In the US, we recently launched our Robinhood Earn crypto product, which gives customers a year to 7 % where they can actually lend their USDG, which is a stable coin we're in partnership with. Where you transcend the world of DeFi, where for some customers that can be a little bit tricky to access.