Robinhood withdraws bank charter application
The stock-trading startup will instead focus on delivering its new ‘cash management’ account
Stock-trading app Robinhood has withdrawn its application to become a federally insured bank.
The firm submitted its application to the US Office of the Comptroller of the Currency in April. However, it decided to withdraw its application so it can “continue to focus on increasing participation in the financial system and challenging the industry to better serve everyone.''
Robinhood provides commission-free stock trading through its app. Since launching in 2015 it has proved popular with young consumers, and hit a valuation of $7.6bn (£5.8bn, €6.9bn) in its latest funding round.
The bank charter application was the startup’s first step towards being able to offer traditional banking products and services. Its change of direction will now see Robinhood focus on its ‘cash management’ account, which was launched last month.
This is the fintech’s second attempt in a year to offer a financial service, where customers’ cash is moved into partner banks, who then pay interest based on the available rates.
The previous checking & savings account from Robinhood offered a 3 per cent interest rate, which resulted in a backlash from regulatory bodies. This new account has a current APY of 1.80 per cent.
Based in California, Robinhood will be bringing its services to the UK in 2020.
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