Revealing the Dark Side of Financial Inclusion: The Case of Robinhood

Authors: Gordon Kuo Siong Tan*, Singapore University of Technology and Design
Topics: Development, Economic Geography, United States
Keywords: FinTech, financial inclusion, platform, capitalism
Session Type: Virtual Paper
Day: 4/8/2021
Start / End Time: 3:05 PM / 4:20 PM
Room: Virtual 23
Presentation File: No File Uploaded

Financial technology (FinTech) has been claimed to herald a new era of democratizing access to finance. Development agendas targeting the Global South have explicitly incorporated FinTech in promoting greater financial inclusion. This paper challenges this dominant narrative of FinTech by revealing the dark side of FinTech-enabled financial inclusion, using the popular US-based mobile investing platform Robinhood as a case study. Analyzing press articles of Robinhood and regulatory filings of online brokerages, I show how design plays a central role in Robinhood’s articulation of new investors into the stock markets through its simple, minimalist app interface that deploys gamified elements to keep users engaged. The ease of investing via such platform-based online brokerages, together with bustling community-based investing forums offering unverified hot stock tips and trading strategies, have seen novice investors taking on ever greater amounts of uninformed trading risk. I argue that Robinhood’s business model is heavily driven by the continued expansion of its user base that allows platform capitalism to be enacted by extracting rent through various revenue streams, in which higher rents are derived from more frequent and riskier trading behaviors. The narrative of promoting greater financial inclusion obscures the capitalist logics and hidden dangers that underlie FinTech.

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