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.

On the one hand, we could use the simple two-tap card flow, which was too expensive to be our primary option. On the other, manual transfers were too expensive for us to support, and getting worse as time went on.

Damon Roberts, Product Manager

The solution

Freetrade implemented TrueLayer’s Payments solution to streamline their customer payments process. The solution delivers a simplified in-app deposit flow for users, with cost-effective processing. 

Customers can make payments quickly, and for Freetrade, the payment parameters are all present and ready to be automatically allocated. This optimises the experience for Freetrade, enabling them to pay it forward to their customers. 

TrueLayer has provided the most cost-effective way of taking customer deposits. Having this simple and low-friction way of depositing, which is scalable in terms of business requirements, is fundamental to our next phase of growth.

Damon Roberts, Product Manager

The results

Implementing TrueLayer's Payments API enabled Freetrade to reduce manual bank transfers from 90% of total deposits to just 25% and cards to 5%.

In turn, this enabled Damon and the team at Freetrade to reduce total unallocated deposits from 10% per cent to just 3% and make significant cost savings.

The total value of open banking transactions increased by 60% soon after launch, and the total volume of open banking transactions increased by 35%. 

TrueLayer was able to support and enable Freetrade through unprecedented growth – with more to come.

Instant access to open banking
Easily integrate next-generation payments and financial data into any app. Build powerful products your customers love.