Investment App Robinhood Poised to Offer Bank Products
Originally published on: CoinSpeaker
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June 22, 2018
Stock trading app Robinhood is constantly working on offering new services for its clients. Now it is going to get a license to perform banking services.
Robinhood, a free stock-stock trading platform that this year has announced the launch of a commission-free cryptocurrency trading service in some US states, now is going to provide its customers with savings accounts and other traditional banking services.
At the moment, under the current regulation this California-based company doesn’t have a right to operate like a bank. But as it has become known Robinhood has already begun discussions with regulators with a view to receive allowance to offer banking-like products through different licenses or partnerships.
The representatives of Robinhood are leading a dialogue with the Office of the Comptroller of the Currency, that is responsible for regulation of all US national banks and federal savings associations.
Robinhood is not the only financial technology startup that has decided to go in for more traditional banking sphere. Recently, Social Finance Inc. and Stash Financial Inc. have already started to consider an opportunity to offer similar products.
The main aim of digital startups that enter this industry is to expand their relations with clients and to distract people’s attention from major banks. Young companies try to provide their clients with better experience, higher interest rates and an opportunity to get several types of services in one place.
At the moment Robinhood’s commission-free stock trading platform has over 4 million registered users. People living in some US states can use the platform for trading Bitcoin and Ethereum as well.
Currently, Robinhood is regulated by the Securities and Exchange Commission (SEC) and is registered with the Financial Industry Regulatory Authority (FINRA) as a broker-dealer.
If Robinhood is registered as a bank, it will have an opportunity to offer even a wider range of services and to become a one-stop financial platform.
As the rules and requirements for the companies that want to perform banking services are rather strict, a lot of startups prefer to provide such services through partnerships or mergers with existing institutions. Getting a banking license can be challenging and may take months or even years.
According to Vlad Tenev, CEO and founder of Robinhood, deepening relationships with their customers is their main business priority that gives a direction for the further development.
In May, the company raised a new funding round and received a valuation of $5.6 billion. Sequoia Capital, Kleiner Perkins Caufield & Byers, Iconiq Capital and Alphabet Inc.’s growth fund CapitalG are among investors that have signed on to support the project for the first time in that funding round.
Earlier this June, CoinSpeaker has listed 3 fintech startups offering their solutions to the crypto industry that definitely deserve to be monitored. And Robinhood is also included in this list. In the nearest future the startup is planning to add more cryptocurrency for its services and its founder believes that “cryptos are the first step to get your feet wet with financial services.”