Public recently announced a massive new funding, and along with it, a commitment to drop payment for order flow.
This is a bold decision and sets Public apart from Robinhood and most other brokers, who generate significant revenue from payment for order flow.
Instead, Public will rely on tips from its customers to generate some of its revenue.
The key to making this work is setting smart UX defaults.
More specifically – Public will generate significantly more revenue by calculating a standard tip, auto-populating this for the user, and then requiring the user to “opt out” by changing or removing the tip amount.
This tiny UX decision – while seemingly insignificant – will have a massive impact on the feature’s success.
Why? The 401(k) industry has proven this out over many years, through the work of Shlomo Ben Artzi’s “Save More Tomorrow” research.
More specifically, smart defaults and automatic enrollment cause massive increases in 401(k) plan participation and total savings. Assuming a $100k income and typical 401(k) plan, by some estimates this could amount to over $400,000 in additional retirement savings.
Source: James Choi, Harvard Economics, et al: “Plan Designs and 401(k) Savings Outcomes”
Public has a great opportunity to align itself toward the best interest of its customers and to build a great revenue stream in the process.