• Robinhood is a zero-fee stock trading app launched in the US in 2013. It has 4 million customers, many of them millennials, and earlier this year was valued at $5.6 billion.
• Many European startups are hoping to emulate its success with low or no fee trading apps.
• The UK's Revolut this week announced plans for a commission-free trading app and Freetrade, another stock trading startup, has crowdfunded £3 million.

LONDON — Startups across Europe are racing to try and replicate the success of Robinhood, the hot US stock trading app.

San Francisco-based Robinhood offers a zero-fee trading app that has taken off with young Americans. Founded in 2013, it claims to have 4 million customers and in May hit a valuation of $5.6 billion.

This success has not gone unnoticed. Fast-growing UK fintech startup Revolut on Thursday announced plans to build a commission-free stock trading platform, similar to the way Robinhood works.

Meanwhile, Freetrade, another UK startup trying to offer free basic stock trading, raised £3 million in a crowdfunding round in May. Dabbl, another new stock trading app, is running a crowdfunding campaign later this month.

'The room for improvement is massive'

Revolut, Freetrade, and Dabbl are part of a group of startups across Europe vying to repeat Robinhood's success.

"I think it has something to do with the $5.6 billion valuation that Robinhood achieved in their last round," said Kerim Derhalli of the flurry of activity. Derhalli is the founder of Invstr, another app trying to get millennials into app-based trading.

Adam Dodds, the founder of Freetrade, told Business Insider: "The opportunity is enormous. The rapid success of challenger banks shows us how much appetite there is for a new relationship with financial services."

Britain has seen an explosion of new app-only banks opening up over the last few years. Monzo, one of the most high-profile, has attracted half a million customers in just a few years.

"With all technology at the moment it's all about ease of use, aesthetically pleasing — all these challenger banks and everyone else, it's all going in that direction," Dabbl's cofounder Mark Ackred told Business Insider.

"The industry is pretty archaic and a lot of the costs can be brought down by using new technologies. That's the first thing. And the second thing is, none of the existing platforms out there are very consumer friendly."

Revolut's CEO Nikolay Storonsky said: "Brokers are charging people as much as £5.00 ($6.70) per trade and the user interfaces are typically clunky, slow and confusing for consumers. The pain points are clear for us and the room for improvement is massive."

'We're talking about a new breed of investor'

Ackred and others see their new apps as a way to engage a new generation of people in stock market investing, rather than just offering more up-to-date products to existing investors.

"We've just done some research and found 94% of millennials don't actually invest but do want to," Ackred said. "There isn't a sufficient solution out there for them at the moment. We're actually talking about a new breed of investor."

Dodds said: "There are 16 million millennials just in the UK and 100 million more in Europe who are new to investing and have no good options to start."

Dodds said he was inspired to set up Freetrade after coming to the UK from his native Canada and looking for a British or European equivalent to Robinhood — a low-cost, mobile-first stock trading app. There wasn't one.

As Business Insider reported at the start of 2016, Robinhood was advertising for staff in London to spearhead a European launch. But this trail has gone cold and there is as yet no sign of Robinhood expanding beyond the US.

Dodds said that Robinhood may have been put off by the regulatory complexity of overseas operations when it comes to stock trading. His company has yet to launch but has been working for the last two years to set up the infrastructure needed, including integrating with the London Stock Exchange earlier this year.

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