I give them 2 years before they change their model. Let's check out their focus report at year end and see if they make money with this model. My guess is not ever.
For the above https://support.robinhood.com/hc/en-us/articles/202853769-How-Robinhood-Makes-Money , I can open account if and only if they make money from 1)margin interest 2)zero interest in cash balance. However if they take personal info from cell phone like above, then who will open the account? For the second https://support.robinhood.com/hc/en-us/articles/202853769-How-Robinhood-Makes-Money since my English is short some please explain long statement to me with NO legal terminology.
Their 2014 focus report is available on SEC.gov. They reported just under $800k in assets with capital contributions of around $77k subsequent to the filing. They've raised over $60 million, probably a lot went into the product (i.e. mobile app) and marketing, however I'm not sure how they grew inflows in 2015. They apparently cater to tech-savvy millennials with iPhones who are able to open small cash accounts. Zecco Trading once had a similar model, and was purchased by Trade King. Zecco was unable to survive with a $0 based commission model, and Trade King acquired their customers. Ya, give it a few years and perhaps they will "change their model." As entrepreneurs, they definitely get credit for entering a very competitive space.
http://blog.themistrading.com/2014/11/beware-of-those-offering-free-retail-trades/ http://blog.themistrading.com/2016/01/robin-hood-the-legend-of-internalization/ And here is a Robinhood competitor: https://www.ustocktrade.com/
Late to this thread but ustocktrade is a completely different animal to Robinhood - off exchange. With a lean operation and use of modern technology why shouldn't zero commissions be completely feasible? Over in Europe there are at least a couple of other start-ups (that I know of) following a similar business model so I think the zero commission thing is here to stay: https://www.freetrade.io https://www.deziro.com/uk/ I'm sure there will be more to come. It's the logical conclusion of a downward trend in commissions that has been going for a while now.
Downtrend in comissions have been great for the little guy. I think I saw Ninja Brokerage offering 30c in some adds. No point going any lower really. On a $500 ES marigin that is 0.1% roundtrip in comissions. Now we just gotta see CME drop its exchange fees......
Mobile trading can be dangerous (security) since the mobile net is insecure like a postcard... Robinhood should offer their product also to normal desktop users.
Can you explain where you see the vulnerabilities, specifically as applied to a trading app and what the attack vectors might be?