Categories: Bitcoin Business

Robinhood App Encroaches on Banking Turf with High-Yield Money Tool

Click here to view original web page at www.ccn.com
Popular stock market and crypto trading app Robinhood is going after legacy banks with the relaunch of a cash management feature. | Source: Shutterstock

Libra isn't the only payment system that stands to threaten the banks. Popular stock market and crypto trading app Robinhood is going after legacy banks with the relaunch of a cash management feature. Robinhood COO Gretchen Howard is cited in Fortune as saying:

"We’re going to come out with a cash management account soon."

The feature was previously launched and then quickly discontinued in December 2018.

Robinhood plans relaunch of high yield cash account https://t.co/SxJagEnOzZ

— FORTUNE (@FortuneMagazine) July 17, 2019

To an extent, the existence of cryptocurrency has already disrupted traditional banking because it is decentralized. When decentralized financial systems integrate with a fintech platform like Robinhood, banks clearly become superfluous. This is something that many of the big banks are trying to respond to using policy lobbying to slow adoption of such technologies or by constructing their own centralized alternatives.

It will be recalled that back in December, Robinhood announced the launch of a fee-free checking-and-savings account offering a 3 percent yield to its largely youthful audience. This came after the introduction of crypto trading on its app, which allowed many to interact with bitcoin for the very first time.

On that occasion, the launch was botched because regulators quickly pointed out that it was effectively offering an unregulated bank account with no deposit insurance as required under U.S. federal law. This time, however, the company has come prepared with the legacy investment banking establishment firmly in its crosshairs as it seeks to disrupt their business model. The approach seems to be unstoppable.

Robinhood Disrupting Banking Without Offering an Account

Following December's humiliating retraction, Robinhood is eager to stress that the new product is not in fact a bank account but rather a cash management tool embedded within customers' existing Robinhood brokerage accounts. While important for regulatory reasons, this is little more than a semantic difference because the new service still has the ability to functionally replace a conventional bank account.

The company is very unsubtle about its plans to unseat the existing order and create a new investment paradigm focused on bringing in large numbers of youthful retail investors instead of a handful of well-heeled investors. From a bank's point of view, this can only mean more disruption to add to that already created by cryptocurrency.

Robinhood Didn’t Consult Regulators on New Checking & Savings Account Products https://t.co/wQDyTcTNMO

— CCN Markets (@CCNMarkets) December 14, 2018

According to Howard, in addition to expanding its brokerage services, Robinhood has also applied for a federal bank charter, which would authorize it to offer products and services currently restricted to legacy banking establishments. In the long term, the company's goal is not just to disrupt investment but banking as a whole. If the reaction of the banks is anything to go by, this threat is being received with a palpable sense of alarm.

Going to War With the Banking Establishment

Apart from startups like Square and Robinhood, other fintech solutions like Facebook's Libra stablecoin have effectively declared war on the legacy banking establishment.

When you think about it, the 4th of July is like celebrating America for IPO’ing back in 1776.

cinerama

Illuminati, Mason, Anonymous I'll never tell. I can tell you this, global power is shifting and those who have the new intelligence are working to acquire this new force. You matter naught except to yourself, therefore prepare for the least expected and make your place in the new world order.

Disqus Comments Loading...
Share
Published by
cinerama

Recent Posts

G7 To Investigate Bitcoin{BTC} And Other CryptoCurrencies

Source: Wikimedia The G7 meets next week to investigate regulations for Bitcoin and other cryptocurrencies. G7 To Discuss Bitcoin Next… Read More

50 mins ago

US Treasury Blackballs Bitcoin Addresses of Chinese Drug Kingpins

The US Treasury is blacklisting specific bitcoin addresses related to Chinese druglords. | Source: Shutterstock By CCN Markets : The… Read More

51 mins ago

Modex: How blockchain can solve the fake news problem

LONDON, UK - Media OutReach - 22 August 2019 -When Satoshi Nakamoto solved the Byzantine General's problem in 2008 by… Read More

51 mins ago

Unlocking the future of blockchain innovation with privacy-preserving technologies

The origins of blockchain as many are familiar with it today can be traced back to the Bitcoin whitepaper ,… Read More

51 mins ago

Maerki Baumann Why a Swiss private bank is embracing blockchain

Maerki Baumann decided it could not sit still and hope for the best. At a time of increasing pressure on… Read More

51 mins ago

World Bank picks up millions in latest blockchain bond move

In August of last year, the World Bank and the Commonwealth Bank of Australia (CBA) announced a new bond alternative… Read More

51 mins ago

This website uses cookies. We use these cookies to collect data about your interaction with our website for the purpose of continuously improving your experience with our site. For more information we encourage you to read our privacy policy.

Read More