Shares, Trade Republic, Robinhood: the growing appetite of investment apps for cryptos

It was exactly one month ago. On 22 November, Shares was holding a party at the Hôtel de l'Industrie, in the heart of Paris, to make official its launch in France.

That evening, the main room of the hotel was full (we were there). On stage, the speeches followed one another: first that of Shares CEO Benjamin Chemla, then those of the guests, including the majority MP specialising in start-ups, Paul Midy (Renaissance), until the expected speech by the company's head of product.

Slides in support, Harjas Singh explained how the investment application born in 2021 in the UK, and went on to explain the levers he planned to use to replicate the recipe for Shares' British success (150,000 accounts in 12 months) in France.

There is, of course, the share portfolio (more than 1,500 shares available), the savings products (company savings plans and others), and the social networking part of Shares; in fact this is its main asset. But the start-up also cited crypto-currencies.

"With Shares, you can invest in around fifty cryptos", he explained in front of a hundred or so enthralled guests.

The fact that the British start-up is making cryptos a part of its strategy is by no means insignificant. Competitors such as Germany's Trade Republic and the US's Robinhood have also moved up a gear on bitcoin and crypto-assets. Not to mention Revolut 🇬🇧, which is in the process of recruiting around twenty people to expand its offering in Europe - excluding the UK.

The real question is: why are they all doing it, and especially now?

While the context obviously plays a part - bitcoin has risen 150% in 2023 - the explanation lies mainly in the fact that crypto-currencies have become a "must-have" for investment applications. If we were to tease, we'd say that it's little more than the banks that continue to drag their feet on the subject.

"At the moment, cryptocurrencies only account for a tiny fraction of our volumes, but demand is only going to increase, and we need to position ourselves," points out Stanislas Chertok, head of Shares in France.

A sentiment echoed by others: "There's a real groundswell in cryptos," confirms Vincent Grard, head of France for Trade Republic.

 Broadening the audience

With cryptos, the aim of investment apps is twofold: to broaden their audience and retain their current customer base, which ranges from a few hundred thousand (Shares) to several million people (Trade Republic, Robinhood, Revolut).

"Cryptos have had the advantage of getting a large number of people, particularly young people, into investing. First they do crypto, then they switch to other types of investment like stocks and bonds, and that's precisely what we offer," sums up Vincent Grard.

Trade Republic allows you to invest in more than 10,000 stocks and bonds, particularly in the form of ETFs.

 Simplicity, price and trust

Today, investment apps have several arguments against specialist crypto brokers such as Bitpanda, Coinhouse, eToro and Swissquote (the latter does not have PSAN registration and cannot actively solicit French customers, however it is possible to use it).

 First there are the "official" arguments:

👉 The first is that of simplicity. "We don't offer hundreds of cryptos because customers don't need a plethora of choice," explains Stanislas Chertok. "Over 90% of the cryptos that are acquired via our services are bitcoin and ether," stresses Vincent Grard for his part.

👉 The second argument is diversity. Trade Republic, Shares and others like Robinhood and Revolut don't just do cryptos, far from it! "Our customers have access to virtually all financial assets," explains a Robinhood spokesperson.

👉 The third is price 🤑. Payment apps have very aggressive offers, and therefore very competitive. For Shares, it's €1 for all transactions up to €100, then 1% of the total transaction amount beyond that.

For Trade Republic, it's even cheaper, as customers only have to pay €1 per transaction, regardless of volumes!

For its part, Robinhood simply explains that it's the cheapest player on the market. That's all there is to it! "Robinhood has the lowest prices in Europe", assures a spokesperson for the American company, which has just launched its crypto service in Europe (25 crypto currencies are available).

How does the American platform achieve this? Through volumes? Through specific agreements? Historically, its business model has been based on selling the huge order flows placed by its 25 million customers to market makers.

On the crypto side, Robinhood says it "works with several exchanges to provide the cheapest prices", according to its spokesperson, referring to its online brochure. We followed up Robinhood to find out more, but they were unwilling to give any further details.

Beyond the debates about the price of so-and-so, apps are cheaper overall than crypto brokers (Coinhouse, Bitpanda, etc.), which operate on commission systems in the form of percentages.

"Crypto brokers are more expensive than investment apps. As long as the markets remain fairly calm, it won't show too much, but it will become an issue fairly quickly if the markets rise sharply and activity becomes more significant," explains a good industry insider.

👉 Finally, there is the "unofficial" argument, which is of considerable importance:

Trust in 100% crypto players is at an all-time low. "The fall of FTX has been a trauma for a lot of people," says one European investor. "Clients want to use platforms in which they have absolute confidence", agrees Stanislas Chertok of Shares. "Our aim is to offer financial exposure to Web3 with a user experience and security inherited from Web2", he adds.

Investment applications, which are heavily regulated, offer quite a few guarantees from this point of view. Trade Republic, for example, has just obtained a banking licence in Germany 👀.

Brokers are defending themselves‍

Faced with this offensive, the historic crypto brokers want to reassure themselves. "We're obviously watching what these new players are doing, even if for the moment they're not really a threat," explains Nicolas Louvet, CEO of Coinhouse, a long-standing player in France that claims 500,000 customers (individuals and businesses).

For some, they're even a godsend: Revolut, for example, uses Bitstamp's services on a white label basis. At neo-banks Lydia and N26, crypto activity is delegated to their partner Bitpanda.

But for how much longer? That's the whole question. "Our crypto offering is not competitive enough", Stanislas Chertok himself admits, adding "for the time being". "Our services are clearly more extensive", agrees Nicolas Louvet.

Crypto brokers do indeed have the advantage of having real depth in their offering. Bitpanda allows you to invest in over 300 cryptos. For its part, eToro gives access to 80 cryptos, while Coinhouse's offering only covers around 50 cryptos, but the company highlights other services such as trading, personalised support - telephone appointments with an adviser - and the availability of funds.

Today, traditional investment applications are designed to make occasional transactions or else programmed purchases. "We are not targeting active investors", i.e. traders, confirms Vincent Grard.

There is also the question of the availability of funds. Customers of investment apps such as Trade Republic, Revolut or Robinhood cannot withdraw their crypto funds. Withdrawals are only available in fiat currency, i.e. euros, pounds or dollars. "This will come at some point, but not at the moment," says a Robinhood spokesperson.

In addition, some of them do not allow crypto-crypto conversions (they require you to go back through fiat before redeeming another crypto), which triggers a tax event (crypto-crypto transactions are not taxed).

There is also the issue of staking. None of the traditional investment apps offer this type of service (apart from Revolut), yet it has become something in high demand. "We offer staking on more than 30 cryptos, and it's going very well," boasts Thomas Romain, head of France for crypto broker Bitpanda, who explains that "it's great that these new players are arriving, they're showing that there's a real market."

A sign that things are changing, however, Coinhouse yesterday announced a new fee structure with much more competitive prices. The French broker will cut its purchase fees from 2.99% to 0.99% (for purchases via the Coinhouse euro account or by bank transfer) and its swap fees - between cryptos - from 0.99% to 0.69%.

"This reduction in our fees is made possible today by the growth in our customer base," explains Nicolas Louvet. But the rise of new competitors is obviously not to blame. "

The spectre of banks‍

Beyond the case of investment applications, it is above all the potential arrival of banks that could transform the sector. "People have been talking for 15 years about the loss of trust in banks, but in reality people are still very attached to them because they have their habits there," explains a crypto investor.

Even though Delubac is about to launch its crypto offering, no major bank is yet ready to jump ship. But things are changing.

According to our information, several European banks, including a French one, are looking very seriously at the possibility of allowing their customers to buy and sell cryptos. "Ultimately, what scares me are the banks," says Nicolas Louvet. They have millions of customers and if they activate them, then it could really hurt."