US-based financial services company ‘Robinhood’ has recently launched checking & saving accounts services for its US customers. The company revealed about the new service up updating on the company’s blog post. The company will allow the new customers to follow a similar trend in the new account they have accustomed to. The team on the company’s website wrote “fee-free, commitment-free and surprise-free” to attract its customers.
Robinhood, which offers stock trading service and operates crypto trading platform is also altering the rates that customers used to earn on their bank deposits. The startup is now promising to pay 3% interest to its customers whenever they make a deposit to both checking and saving accounts.
The company blog reads –
“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.”
In June, crypto-friendly Robinhood was rumored to offer banking services to its large customer base which at that time was close to 6 million. Bloomberg in the same month referenced anonymous sources who claimed that the startup could become a banking service provider as it was involved in advanced discussion with the US Office of the Comptroller of the Currency (OCC). Now, with the official announcement being made by the company in the most recent blog post, the firm still hasn’t received the permission to operate as a bank. However, instead of waiting for the approval, the startup has structured its savings and checking accounts under the licenses which they currently have in place.
Robinhood also claimed that the new accounts for customers will come with a personalized debit card that will be compatible with over 75,000 ATM’s for free cash withdrawals across the US. In case if any user is not able to find where the free ATM’s are located they can take the help from the updated Robinhood app, that will allow them to find the nearest free ATM.
The company as of now, with the current license, can act as a broker-dealer of the accounts. Also, being the member of the Securities Investor Protection Corporation, it can protect cash accounts of up to $250,000. The only drawback associated with not having the license is that the company can offer limited investment right now. Robinhood can generate funds from making an investment in safe assets such as US Treasury bonds
With all the progress which the company has made in the last few years in crypto and stock market, they can provide banking services exclusively only to US customers. Recently similar services were offered by London-based digital banking alternative ‘Revolut’ after it received a green signal to offer banking services to European customers.
Nikolay Storonsky, founder and CEO of Revolut stated in an interview “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.”