Images from Twitter: "#Robinhood trade,
before/after." See below for more explanation.
Among all the disruptors of the last decade, some might argue that fintech is the category that has succeeded the most at
stealing the hearts of consumers. Whether it’s paying at Starbucks, shopping for car insurance or checking a bank balance, these are the apps we use constantly. They make us feel smart, while
those old legacy financial companies -- which we still have to do business with -- seem as antique as adding machines.
But last week’s seesawing market revealed that for all of
consumers’ app-loving ways, there’s a limit: Robinhood, the stock-trading start-up, had a meltdown due to market volatility. The two-day shutdown meant its 10 million customers
couldn’t trade at all during the market’s biggest day ever.
Outraged traders took to Twitter in fury. Their responses were also funny. I could have scrolled through those memes for
hours. One, for example, posted a picture of Pope Francis next to the High Sparrow from “Game of Thrones,” captioned “#Robinhood trade, before/after.” (See images above) And at
least one lawsuit has been filed already.
So what happens when the category trailblazer brand turns out to be this flimsy? It makes users yearn for an old-school trading program, and I’m
betting those companies are making bank on Robinhood refugees, happy to swap what’s cool for what works.
Large financial companies are still scrambling to acquire fintech companies, of
course.They’ve long seen acquisition as one of the best ways into the sector. Intuit just scooped up CreditKarma, another no-fee darling, for $7.1 billion, and Visa paid $5.3 billion to get
Plaid in January.
But Robinhood’s fail increases the likelihood that consumers may start to see these deals as appealing, too: Any association with an “old” company probably
sounds pretty good right now.
I think this may have an impact on other D2C categories, too, and those app-loving consumers may become willing to consciously accept a crappier experience from a
legacy company over an excellent one that seems less trustworthy.
I’ll chance a mishap paying DoorDash for sushi delivery. I’m much more worried about my retirement account.
And in the same way we’ve all gotten used to taking off our shoes at airport security, we’ve also gotten accustomed to less-than-swift payment methods. Thanks to things like two-factor
authentication, for example, using popular budgeting platforms like Mint has gone from fun to digital drudgery. We accept that keeping us safe sometimes means slowing us down.
Yes, it’s
less fun. But it makes the “careful” brands seem like the grown-ups in the room. It’s a tradeoff most of us accept. But don’t expect people to be happy about it.