May 16, 2020

Robinhood cites cause of its three outages

Robinhood
brokerage apps
stock market
Corvid-19
Amber Donovan-Stevens
3 min
Robinhood has experienced its third crash in two weeks. During a particularly turbulent time in the stock market, we look at the possible causes.

Robin...

Robinhood has experienced its third crash in two weeks. During a particularly turbulent time in the stock market, we look at the possible causes. 

Robinhood, one of the most disruptive financial services companies in the fintech space today, has experienced its third outage across its app over the last two weeks. These crashes coincide with particularly challenging days of trading on Wall Street, including the biggest single-day point drop in Dow history. The outages have been met with high volumes of concern from users, who have invested over US$900mn into the US$7bn company. 

Co-CEOs and Co-founders, Baiju Bhatt and Vladimir Tenev, have issued a statement, acknowledging that these outages are “not acceptable”. 

Infrastructure 

The crashes have been attributed to “stress on [Robinhood’s] infrastructure - which struggled with unprecedented load. That in turn led to a “thundering herd” effect - triggering a failure of our DNS system.” The founders have also suggested that the crash is largely down to the dramatic and historic shifts in the US stock market over the last four weeks. 

“Our team is continuing to work to improve the resilience of our infrastructure to meet the heightened load we have been experiencing,” the statement said. “We’re simultaneously working to reduce the interdependencies in our overall infrastructure. We’re also investing in additional redundancies in our infrastructure.”

After the second outage, Robinhood assured its users that Robin Gold premium customers would be compensated. 

CoronaVirus impact 

The volatile shifts in the market can largely be attributed to the fears and supply chain impacts resultant of the Corvid-19 outbreak, which was officially labelled as a pandemic yesterday morning by the WHO. The stock markets are continuing to experience heavy loss days, and there are global concerns that the virus will fuel a recession.

Though Robinhood’s system is fully operational again, the oscillations of the US stock market is causing a number of users to question if this is the end of the outages for the brokerage app. 

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What is Robinhood?

The company was established in 2013 by Baiju Bhatt and Vladimir Tenev, pioneering commission-free investing by building its own technology from scratch. Reinforcing the message behind the business, Tenev has been famously referenced as noting that executing a trade costs brokerages fractions of a penny, but that they then typically charge as much at $10 per trade; that's before you include the required $500 to $5,000 account minimums.

Did you know? Robinhood is due to launch in the UK this year. Though it is not known if the recent challenges faced by the investment broker will delay the launch, UK users can sign up for early access. 

[images: Robinhood]

For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.

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Apr 29, 2021

Stripe backs Step - the digital bank for teens

Stripe
Step
onlinebanking
Fintech
Joanna England
3 min
Stripe backs Step - the digital bank for teens
Payments giant Stripe continues it's startup investment streak and has also announced plans to acquire tax software fintech, TaxJar...

The digital payment solutions giant, Stripe, has re-invested in the San Francisco-based teen banking fintech startup, Step. 

The Series C round raised US$100m in capital from a number of backers, including Coatue, TikTok star Charli D’Amelio, actor Jared Leto, and Will Smith’s Dreamers VC, for the enterprise. 

Step provides a free FDIC-insured bank account and Visa card to teenagers. The accounts are backed by Evolve Bank and there is no subscription charge for its usage. Users don’t pay for their accounts and there are also no overdraft fees. 

The mobile banking app enables parents to set controls and limits on spending and encourage responsible finances. According to data released by the company, 88% of the platform’s users say this is their first bank account. 

Big backers

To date, Step has seen great success in the marketplace. The company has raised more than $175m from investors and now has 1.5m users.

Stripe, which was founded by Irish brothers Patrick and John Collison, previously led Step’s $22.5m Series A round in 2019.

Step's Series B funding round also brought in $50m, and has a distinctly celeb-tinged reputation with investors including Justin Timberlake and the pop duo The Chainsmokers.

Users get access to a free, FDIC-backed bank account, a spending card and P2P payments platform to send and receive money instantly.

CJ MacDonald, chief executive of Step, said the company is aiming to improve the financial futures of the next generation. “Step is the only banking platform that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind.

He has previously spoken about the importance of financial literacy for young people. “Money is just one of those things where I think the more educated and equipped you are early, the better decisions you can make down the road,” he told PYMNTS. “And you can also prevent yourself from making costly mistakes. I mean, the average American doesn't have $400 in emergency savings and pays $350 a year in banking fees. If we can help this next generation just ultimately be smarter and more educated as it pertains to money, I think we'll all be better off.”

Kyle Doherty, managing director at General Catalyst and Step board member, explained, “Gen Z is flocking to modern financial solutions that can be easily embedded within their digital lives and Step has a unique model for how to do this right.”

TaxJar acquisition

The news follows on from Stripe’s recent announcement that it plans to acquire TaxJar. The fintech, which builds software for online businesses that automates the reporting and filing of sales taxes, will most likely be integrated with Stripe’s billing services.

Currently, No terms have been disclosed but the Boston start-up had raised more than $60m from investors including Insight Partners.

Stripe chief financial officer Dhivya Suryadevara said of the move, “With TaxJar, we will help millions of internet businesses running on Stripe with their sales tax and make it easier for them to sell internationally.”

Stripe also recently closed a $600m funding round that valued the TaxJar at $95bn and has been investing heavily in fintech startups, including Ramp and Check

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