Robinhood, a company in the financial services sector with its headquarters in Menlo Park, has introduced savings and checking accounts for its customers in the US, as reported by the company’s blog. The newly introduced accounts will follow a similar pathway, “fee-free, commitment-free and surprise-free” which the company did not fail to note on its website.
Robinhood provides stock and cryptocurrency trading services and is now making efforts to upgrade what customers usually receive on their bank deposits. An assurance has been given by the startup that every deposit into both the savings and checking accounts will attract a 3 percent interest.
Here is a statement from the company’s blog:
“Currently, traditional checking and savings accounts cost more for people who make less, are riddled with unfair and hidden fees, and earn you minimal returns on your savings. We believe you should earn more on your money, and shouldn’t be charged fees to access it.”
Advancement Talks With the OCC
Many months ago, precisely in June, it was rumored that Robinhood was planning to introduce banking services to its customers numbering over 6 million. An anonymous source disclosed to Bloomberg that the startup’s aim to provide banking services was already in motion as discussions with the OCC, US Office of the Controller of Currency, was in the advanced phase.
The company has disclosed that its savings and checking accounts will be structured to operate under the current licenses of the company, though it is yet to obtain operational permission to function as a bank.
Robinhood has designed a debit card for the account which can be used anywhere in the US to withdraw cash for free from more than 75,000 ATMs. Customers who cannot locate the free ATMs can find one by using a new feature on the Robinhood app to help them determine the nearest ATM.
It is true that Robinhood is yet to secure a bank charter, but it already has a broker-dealer license and also belongs to the Securities Investor Protection Corporation which gives it the right to protect accounts with up to $250,000. The absence of a bank charter makes certain investments harder to purchase with its deposits. For the time being, Robinhood will use its investments in secure assets such as debit card transactions interchange fees and US Treasury bonds to generate funds.
Revolut; A European Alternative
As the Robinhood company keeps disrupting the US financial market, Revolut, a digital banking and crypto trading company, aims to dominate the European continent. The startup which is based in London recently received a go-ahead to offer banking services to European customers. Revolut’s founder and CEO, Nikolay Storonsky, made the statement below:
“Our vision is simple: one app with tens of millions of users, where you can manage every aspect of your financial life with the best value and technology.”