The Risks of Prediction Markets for Fintechs: Insights from Inversion CEO

In the race to incorporate prediction markets, fintech platforms may face increased user turnover, according to Santiago Roel Santos, founder and CEO of Inversion Capital. While he acknowledges the potential of prediction markets, Santos warns that integrating such features into mainstream finance apps might jeopardize their long-term viability by increasing the risk of account liquidation.

Key Takeaways

Fintech platforms like Robinhood are adding prediction markets, leading to concerns about user churn.
Santos believes that while prediction markets can be appealing, they may disrupt the core purpose of financial apps.
The risk of losing users could outweigh short-term gains from prediction market features.
Successful financial apps will prioritize user retention over temporary market speculation.

Fintechs’ prediction market addons will cost them in churn: Inversion CEO

The Concerns of User Churn

Finance platforms hurriedly adding prediction markets risk facing a “casino-like” environment that increases user churn, according to Santiago Roel Santos, CEO and founder of Inversion Capital. In a blog post published on Saturday, Santos, who supports the concept of prediction markets, expressed apprehension that mainstream financial apps, including Robinhood, may compromise their value by exposing users to higher risks and potential account liquidation.

Santos explained, “It’s not the losses users incur that are the issue; it’s the churn that follows.” He elaborated, stating that prolonged engagement with prediction markets could heighten the chances of liquidation, ultimately removing users from the sector entirely. “Once a user churns, they become valueless.”

The Rise of Prediction Markets

In 2025, Robinhood escalated its focus on prediction markets, and competitors such as Coinbase and Gemini are poised to launch similar features, enabling users to place bets on various events, spanning sports to political outcomes. Santos cautioned that emphasizing these types of products could detract from the apps' primary mission, which is to provide simple and accessible financial services to retail customers.

“Platforms like Robinhood gained traction because they are easier to use and more aligned with digital-native users compared to traditional providers,” he noted. However, he pointed out that as users mature, the real opportunity lies in evolving alongside them and integrating more aspects of their financial lives rather than maximizing immediate profit at times of speculation. “If you want longevity, focusing on retention is key.”

Source: Santiago Roel Santos

Short-Term Gains, Long-Term Risks

The adoption of blockchain-based prediction markets spiked during the 2024 US elections, with Robinhood collaborating with Kalshi in March to tap into this trend. Recently, Coinbase announced its intention to add prediction markets as part of its “everything app” initiative in partnership with Kalshi, and a Gemini affiliate has secured a US license to offer event contracts.

While Santos acknowledges that prediction markets may yield attractive short-term financial results, he believes that they ultimately introduce considerable risks that could destabilize user engagement on these finance platforms. He argues that “financial superapps that regard churn as a primary risk will develop stronger competitive advantages and better long-term results.”

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