Robinhood Drops Plans to Become A Bank; Withdraws Application

November 29, 2019 | FinTech, Latest News
https://dailyalts.com/wp-content/uploads/2019/11/entrepreneur-2411763_1920-robinhood.jpg

Robinhood, the pioneering zero commission stockbroker, has put banking ambitions on the backburner.

Robinhood withdrew its bank charter application to launch a federally insured bank. It had filed an application with the Office of the Comptroller of the Currency on April 19, 2019. At the time, Robinhood said consumer banking services were a “natural extension” of its goal to give more consumers access to financial services.

The startup fintech’s app-based stock trading facility is popular with millennials. The company raised $ 323 million in a July funding round which valued it at $ 7.6 billion.

The discount brokerage gave no reason for the withdrawal of its banking applications, saying that it was doing so “voluntarily.”

However, a company spokesperson said Robin Hood would continue to focus on increasing participation in the financial system. It would also challenge the industry to better serve everyone.

Back to square one

Start-Ups such as Robin Hood, which do not have a banking license, must partner with existing licensed banks to offer services such as checking accounts and debit cards.

For example, Apple tied-up with Goldman Sachs for its debit card. TD Ameritrade’s arrangement with TD Bank for customer cash is another example. Discount broker Charles Schwab has its in-house bank subsidiary to handle and invest customer cash.

Last month, however, Robin Hood said it would offer a cash management program tied to its brokerage account. It would move customer cash to associated banks and pay 2.05% APY as of October 8, 2019. It said the said deposits would be eligible for FDIC insurance up to a total of $ 1.25 million subject to FDIC rules. However, this feature is not yet live.

Last year, the startup ran into a regulatory fiasco after it tried to launch no-fee checking and savings accounts with inadequate arrangements for their insurance. Robinhood quickly axed the initiative.

[Related Story: UBS: Fintech Darling Robinhood’s Business Model in Serious Jeopardy    ]

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2022/05/Flowcarbon-grab-merged.jpg
Venture Capital/ESG: Adam Neumann Co-Founded Flowcarbon Raises $70M Via VC Funding And Token Sale

Flowcarbon, co-founded by Adam Neumann, known for WeWork, is a climate technology company seeking to formalize the market for carbon offsets on the blockchain. The startup announced Tuesday its $70…

https://dailyalts.com/wp-content/uploads/2022/05/Artists_impression_of_dust_formation_around_a_supernova_explosion-overlay.jpg
Digital Assets: The Terra (LUNA) Implosion – Sidelights
May 25, 2022     Digital Assets, Latest News, News

One hapless investor lost about 3 billion won ($2.4 million) in the LUNA and UST implosion earlier this month. A Korean social media personality going by the name of “Chancers”…

https://dailyalts.com/wp-content/uploads/2022/05/earthquake-g49825e696_640.jpg
Artificial Intelligence: AI Could Bring Us Fresh Insight Into Earthquakes
May 25, 2022     Artificial Intelligence, News

Scientists have long held the view that earthquakes are impossible to predict, being random events. But the potential for damage these natural events have, including the loss of life, have…

https://dailyalts.com/wp-content/uploads/2022/05/Africa-Blockchain-Report-Grab.jpg
Digital Assets: Swiss Venture Firm CV VC Launches African Blockchain Early-Stage Fund; Issues African Blockchain Report
May 24, 2022     Digital Assets, News, Venture Capital

CV VC announced Monday at Davos the launch of its African Blockchain Early-Stage Fund to bring the advantages of the blockchain and its own expertise to enable Africa to transact…