IDEAS home Printed from https://ideas.repec.org/a/sae/envira/v53y2021i8p1862-1878.html
   My bibliography  Save this article

Democratizing finance with Robinhood: Financial infrastructure, interface design and platform capitalism

Author

Listed:
  • Gordon Kuo Siong Tan

Abstract

It is widely claimed that financial technology democratizes financial access and promotes financial inclusion. This paper challenges this dominant narrative of financial technology using the popular US-based mobile investing platform Robinhood as a case study. Analyzing press articles on Robinhood and regulatory filings of online brokerages, the concepts of financial infrastructures and platforms are used to unpack the capitalist logics that drive the platform business model. Specifically, this paper shows how digital interface design plays a central role in Robinhood's articulation of investors into the stock markets, through its simple, minimalist app that keeps users engaged by the productive management of ‘frictions’. The ease of investing via platform-based brokerages has seen investors taking on greater amounts of risk. This paper argues that Robinhood's success is driven by the continued expansion of its user base using various interface design techniques. This allows platform capitalism to be enacted by extracting rent through various revenue streams, where higher rents are derived from more frequent and riskier trading behaviors. The narrative of democratizing finance as employed widely in the financial technology sector thus obscures the capitalist logics and predatory practices that underlie financial technology.

Suggested Citation

  • Gordon Kuo Siong Tan, 2021. "Democratizing finance with Robinhood: Financial infrastructure, interface design and platform capitalism," Environment and Planning A, , vol. 53(8), pages 1862-1878, November.
    • Handle: RePEc:sae:envira:v:53:y:2021:i:8:p:1862-1878
    DOI: 10.1177/0308518X211042378
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0308518X211042378
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0308518X211042378?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ali Bhagat & Leanne Roderick, 2020. "Banking on refugees: Racialized expropriation in the fintech era," Environment and Planning A, , vol. 52(8), pages 1498-1515, November.
    2. Nick Bernards & Malcolm Campbell-Verduyn, 2019. "Understanding technological change in global finance through infrastructures," Review of International Political Economy, Taylor & Francis Journals, vol. 26(5), pages 773-789, September.
    3. Marie Langevin, 2019. "Big data for (not so) small loans: technological infrastructures and the massification of fringe finance," Review of International Political Economy, Taylor & Francis Journals, vol. 26(5), pages 790-814, September.
    4. Brad M. Barber & Terrance Odean, 2001. "The Internet and the Investor," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 41-54, Winter.
    5. Ortmann, Regina & Pelster, Matthias & Wengerek, Sascha Tobias, 2020. "COVID-19 and investor behavior," Finance Research Letters, Elsevier, vol. 37(C).
    6. Brad M. Barber & Terrance Odean, 2000. "Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors," Journal of Finance, American Finance Association, vol. 55(2), pages 773-806, April.
    7. Marieke de Goede, 2020. "Finance/security infrastructures," Review of International Political Economy, Taylor & Francis Journals, vol. 28(2), pages 351-368, October.
    8. Tobias Kranz & Florian Teschner & Christof Weinhardt, 2015. "Beware of Performance Indicators," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(6), pages 349-361, December.
    9. Georgios A. Panos & John O. S. Wilson, 2020. "Financial literacy and responsible finance in the FinTech era: capabilities and challenges," The European Journal of Finance, Taylor & Francis Journals, vol. 26(4-5), pages 297-301, March.
    10. Nick Bernards, 2019. "The poverty of fintech? Psychometrics, credit infrastructures, and the limits of financialization," Review of International Political Economy, Taylor & Francis Journals, vol. 26(5), pages 815-838, September.
    11. Julian Gruin & Peter Knaack, 2020. "Not Just Another Shadow Bank: Chinese Authoritarian Capitalism and the ‘Developmental’ Promise of Digital Financial Innovation," New Political Economy, Taylor & Francis Journals, vol. 25(3), pages 370-387, April.
    12. Daniela Gabor & Sally Brooks, 2017. "The digital revolution in financial inclusion: international development in the fintech era," New Political Economy, Taylor & Francis Journals, vol. 22(4), pages 423-436, July.
    13. Chris Clarke, 2019. "Platform lending and the politics of financial infrastructures," Review of International Political Economy, Taylor & Francis Journals, vol. 26(5), pages 863-885, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eric Knight & Dariusz Wójcik, 2020. "FinTech, economy and space: Introduction to the special issue," Environment and Planning A, , vol. 52(8), pages 1490-1497, November.
    2. Michael McCanless, 2023. "Banking on alternative credit scores: Auditing the calculative infrastructure of U.S. consumer lending," Environment and Planning A, , vol. 55(8), pages 2128-2146, November.
    3. Prince Hikouatcha & Alain Gilles Tagne Foka & Armand Depesquidoux Fossi & Simplice A Asongu, 2024. "Empirical investigation of the Fintech and financial literacy nexus: Small business managers’ insights in Cameroon," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 16(2), pages 219-237, February.
    4. Christopher N. Avery & Judith A. Chevalier & Richard J. Zeckhauser, 2016. "The "CAPS" Prediction System and Stock Market Returns," Review of Finance, European Finance Association, vol. 20(4), pages 1363-1381.
    5. Pagano, Michael S. & Sedunov, John & Velthuis, Raisa, 2021. "How did retail investors respond to the COVID-19 pandemic? The effect of Robinhood brokerage customers on market quality," Finance Research Letters, Elsevier, vol. 43(C).
    6. Bellofatto, Anthony & Broihanne, Marie-Hélène & D'Hondt, Catherine, 2019. "Appetite for information and trading behavior," LIDAM Discussion Papers LFIN 2019002, Université catholique de Louvain, Louvain Finance (LFIN).
    7. Choi, James J. & Laibson, David & Metrick, Andrew, 2002. "How does the Internet affect trading? Evidence from investor behavior in 401(k) plans," Journal of Financial Economics, Elsevier, vol. 64(3), pages 397-421, June.
    8. You-Kyung Lee, 2021. "Impacts of Digital Technostress and Digital Technology Self-Efficacy on Fintech Usage Intention of Chinese Gen Z Consumers," Sustainability, MDPI, vol. 13(9), pages 1-15, April.
    9. Djalilov, Abdulaziz & Ülkü, Numan, 2021. "Individual investors’ trading behavior in Moscow Exchange and the COVID-19 crisis," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    10. Francis Lwesya & Adam Beni Swebe Mwakalobo, 2023. "Frontiers in microfinance research for small and medium enterprises (SMEs) and microfinance institutions (MFIs): a bibliometric analysis," Future Business Journal, Springer, vol. 9(1), pages 1-18, December.
    11. Rahel Kunz & Julia Maisenbacher & Lekh Nath Paudel, 2022. "Remittances, development and financialisation beyond the Global North," Environment and Planning A, , vol. 54(4), pages 693-701, June.
    12. Lucy Baker, 2021. "Everyday experiences of digital financial inclusion in India's ‘micro-entrepreneur’ paratransit services," Environment and Planning A, , vol. 53(7), pages 1810-1827, October.
    13. Jakusch, Sven Thorsten & Meyer, Steffen & Hackethal, Andreas, 2019. "Taming models of prospect theory in the wild? Estimation of Vlcek and Hens (2011)," SAFE Working Paper Series 146, Leibniz Institute for Financial Research SAFE, revised 2019.
    14. P. K. Priyan & Wakara Ibrahimu Nyabakora & Geofrey Rwezimula, 2023. "A bibliometric review of the knowledge base on financial inclusion," SN Business & Economics, Springer, vol. 3(2), pages 1-21, February.
    15. Nick Bernards, 2019. "Tracing mutations of neoliberal development governance: ‘Fintech’, failure and the politics of marketization," Environment and Planning A, , vol. 51(7), pages 1442-1459, October.
    16. Baller, Stefanie & Entrop, Oliver & Schober, Alexander & Wilkens, Marco, 2017. "What drives performance in the speculative market of short-term exchange-traded retail products?," Passauer Diskussionspapiere, Betriebswirtschaftliche Reihe B-26-17, University of Passau, Faculty of Business and Economics.
    17. Philippe Bernard & Michel Blanchard, 2013. "The performance of amateur traders on a public internet site: a case of a stock-exchange contest," Economics Bulletin, AccessEcon, vol. 33(3), pages 1729-1737.
    18. Martinčević, Ivana & Črnjević, Sandra & Klopotan, Igor, 2020. "Fintech Revolution in the Financial Industry," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2020), Virtual Conference, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Virtual Conference, 10-12 September 2020, pages 563-571, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    19. Liu, Aiping & Urquía-Grande, Elena & López-Sánchez, Pilar & Rodríguez-López, Ángel, 2023. "Research into microfinance and ICTs: A bibliometric analysis," Evaluation and Program Planning, Elsevier, vol. 97(C).
    20. Lurie, Nicholas H. & Swaminathan, Jayashankar M., 2009. "Is timely information always better? The effect of feedback frequency on decision making," Organizational Behavior and Human Decision Processes, Elsevier, vol. 108(2), pages 315-329, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:envira:v:53:y:2021:i:8:p:1862-1878. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.