Crypto trading platform Robinhood, is reportedly evolving into a financial platform aimed at a diverse array of retail investors. In a significant shift, the company is set to introduce checking and savings accounts later this year for its paying “Gold” subscribers, marking its foray into the banking sector.
Robinhood Aims For Private Banking Experience
Deepak Rao, vice president and general manager of Robinhood Money, said the company intends to differentiate itself from traditional banks by offering a “more personalized,” private-banking-like experience. “You get these crazy products, you get really high interest rates,” Rao noted in a recent interview. “Why don’t we do that, but we give it to everybody?”
While Robinhood is venturing into banking, it is important to note that it is not an FDIC-insured bank. Instead, it will partner with Coastal Community Bank to provide Federal Deposit Insurance Corporation (FDIC) protection on customer deposits.
According to Bloomberg, the anticipated annual percentage yield on its high-yield savings accounts is expected to be around 4%, a competitive rate in today’s financial landscape.
In addition to high interest rates, Robinhood’s banking services will offer features typically associated with private banking, such as estate planning and tax advice.
Customers will also enjoy the convenience of requesting cash to be delivered directly to their homes on the same day, a service that some traditional banks provide but with longer wait times.
Human And Robo-Advisory Services
This move into banking aligns with Robinhood’s broader ambition to become a “one-stop-shop” for consumers’ financial needs, integrating investing, banking, retirement, and other financial products under one brand.
CEO Vlad Tenev articulated this vision during the company’s investor day in December, and since then, Robinhood has also introduced sports-event contracts, further diversifying its offerings.
In addition to its banking expansion, Robinhood is rolling out a tailored wealth-management service. This service will cap fees for Gold subscribers at $250 per year, granting them access to both individual stocks and exchange-traded funds (ETFs), while minimizing taxable gains.
Steph Guild, president of Robinhood Asset Management, emphasized the company’s commitment to creating a hybrid model that combines the benefits of human advisors and robo-advisors. “We thought we’d take the best of those models and create something that doesn’t exist today,” Guild stated
To further enhance its wealth-management services, Robinhood plans to launch an artificial intelligence tool named Robinhood Cortex. This feature will provide investors with advanced analysis and insights to help optimize their investment portfolios.
Featured image from Shutterstock, chart from TradingView.com
