Robinhood has gained popularity in the past few years thanks to its free stock trading platform. However, in recent years it has joined the Big Tech trend of trying to become a fully functioning financial service. The startup filed an application with the Office of the Comptroller of the Currency (yes, that’s a real agency) to offer its own banking products.
Now, the company is withdrawing its application with no plans to resubmit it. The move will throw a significant wrench in Robinhood’s plan to offer checking and savings services.
Robinhood gave millennial investors a way to get into the stock market without hefty trading fees several years ago. With an easy to use platform and mobile app, the company’s offerings quickly became popular. By early 2018, Robinhood had nearly as many users as the better-known online broker E-Trade.
Robinhood began its foray into the mainstream financial services sector back in 2018. The company ended up the crosshairs of regulators after it launched checking and savings services without having insurance or approval. It ultimately chose to remove the feature due to the pushback.
However, in October, Robinhood tried again. It announced a service called Cash Management. This time, the startup sought regulatory approval by submitting an application to become a bank.
Unfortunately, it seems that there has been a change of plans. Robinhood spokesman Dan Mahoney said, “We are voluntarily withdrawing our OCC application or a national bank charter. Robinhood will continue to focus on increasing participation in the financial system and challenging the industry to better serve everyone.”
Hot Trend or Risky Endeavor?
As of now, it isn’t clear why the startup is withdrawing its application. Perhaps there were signals from regulators that it would not go through and Robinhood wanted to move on more quickly. Or, the company might simply be changing its roadmap.
Despite the move, the trend of tech companies diving into finance isn’t going away. Other investment platforms like Betterment have recently launched savings and checking accounts. Meanwhile, Google is planning to offer branded financial services in a partnership with Citibank.
Of course, there is no guarantee that consumers will be all-in on the concept. In fact, the entire idea is still relatively new. Considering the nearly constant privacy scandals and data misuse accusations, it remains to be seen if the public will trust Big Tech corporations with their money.
If the idea does catch on, however, it could be very lucrative for the companies at the forefront. At least for now, Robinhood won’t be one of them. However, its free stock trading platform is still a terrific offering for anyone looking to invest in a more modern way.