Freetrade: empowering retail investors with open banking
Freetrade consistently ranks as the first or second largest retail broker on the London Stock Exchange, having grown rapidly to reach 700,000 customers this year.
“Investing in stocks is complex, expensive and seems out of reach for lots of people, due to opaque charges and clunky user experience,” said Damon Roberts, Product Manager at Freetrade. “Freetrade’s mission is to get everyone investing but simplifying the investment experience and providing transparent, upfront pricing.”
But despite strong growth, as individual investors looked for ways to allocate disposable income during lockdowns, Freetrade’s active customer community were frustrated by the payment process. Friction and poor user experience when making deposits were leading to pain both for customers and for Freetrade – and it was likely to get worse as the company scaled.
The challenge
For new and existing customers, both payment methods Freetrade offered – manual bank transfers and card payments – were painful.
Friction and churn
Manual bank transfers required users to switch between online banking screens and the app, copying and pasting details. This was a clunky experience that often led to drop-off, or churn as customers made mistakes and looked for an easier way to make deposits.
Unallocated payments
If a deposit had been made without the right information, it would be difficult to reconcile. At one point as much as 10% of deposits were unallocated: “That might mean us sending back £300,000 each month to customers for deposits we couldn’t match,” Damon explained. For Freetrade, this caused operational strain which grew with the business, as more and more deposits ended up in the unallocated pool.
Operational cost
Customer support for those unallocated accounts was expensive, with people getting in touch to find out where their money was. The alternative – card payments – was simpler for customers, but with card networks designed for purchases (rather than money transfers), the cost was too high for this to be Freetrade’s primary payment method in the long term, particularly for high value transactions.
Damon and the team needed to find a scalable solution that would deliver a great customer experience.