For years, one of the biggest knocks on Robinhood Markets (HOOD 1.22%) was its weakness in customer service. Unlike full-service brokerages, Robinhood had no phone number you could call for most issues, just an email address where someone could get back to you.
While Robinhood's free trading platform and easy-to-use interface lured new investors, many were frustrated with the lack of customer service. A J.D. Power report found that Robinhood's "strength in digital channels and value for fees was offset by poor performance on trust, people and problem resolution."
Now that's changed. On Tuesday, Robinhood announced 24/7 phone support for any question regarding both stocks and cryptocurrency. The company says it is the first major crypto platform to offer such a service around the clock.
The support team was built in-house, and required a tripling in its entire customer service team. In an interview with The Motley Fool, Robinhood Crypto COO Christine Brown said that adding 24/7 phone support is a big step for the company in its mission to expand access to investing. One element of that is emotional access, which includes making sure investors know that they can get answers to the questions they have -- which is especially important for new investors who might be overwhelmed or intimidated by the jargon that's common across much of the financial world.
The company sees providing access as a crucial advantage, and a reason why the platform has resonated with the newest generation of investors.
Turning a weakness into a strength
Robinhood's mission is to democratize finance for all, and by making free trades the norm across the financial brokerage industry, the company has shattered a significant barrier to entry in investing. But as a fast-growing disruptor, Robinhood's growth has sometimes gotten ahead of its operations. That's led to controversy at times, as well as issues such as a lack of customer service infrastructure to serve its 22.5 million active accounts.
The new 24/7 support corrects that flaw and is an important step in achieving the company's mission. It should also help ensure that the company avoids the bad press and customer complaints that resulted in the past over-locked accounts, like when it temporarily blocked trades in meme stocks like GameStop.
Being the only crypto platform to offer phone service anytime also gives the company an advantage over competitors like Coinbase, which is especially important when so many investors are new to crypto. What's happening now in the industry is essentially a land grab -- companies that get new customers could keep them for life, so it's important that Robinhood capitalizes on the surge in crypto interest.
Riding the crypto boom
Robinhood is rapidly stepping up its crypto capabilities. The company recently rolled out a crypto wallet, allowing users to take their cryptocurrency off the platform and spend it elsewhere, and it also just introduced recurring payments in cryptocurrency, giving investors an easy way to dollar-cost average into their favorite coins. Brown hinted that more new products are on the way, which makes sense -- the Robinhood Crypto team increased by a factor of 10 to take advantage of what should be a huge opportunity for the company.
While most investors probably associate Robinhood with stocks, more than 40% of its second-quarter revenue came from crypto trading, or $233 million out of $565 million, and more than 60% of funded accounts traded in crypto during Q2. More new traders on Robinhood placed their first trades in crypto rather than in stocks, which may be the most telling statistic about its user base. The second quarter marked the spike in Dogecoin and a surge in other cryptocurrency prices. It's unclear if that level of demand will persist, but crypto has become a major driver of Robinhood's business -- and a lucrative one at that, as the company had a GAAP operating income of $65 million in the quarter, or an 11% operating margin.
Robinhood has already established itself as the leading investing platform for millennials and Gen Z, and offering things like 24/7 phone support and in-app courses on investing basics will only strengthen that position. Keep your eye on future additions to its crypto platform, as Robinhood's momentum in digital currencies only seems to be getting started.