The “free” stock trading app, Robinhood, has applied for a traditional banking products charter just ahead of its IPO.
While the idea of trading with “zero commission” made the company popular, it was the introduction of cryptocurrencies on the Robinhood app that really helped the company skyrocket, both in terms of its valuation and popularity among users.
Back in 2018, Leaprate reported:
The unique business model of Robinhood allows it to have a competitive advantage over other crypto exchanges such as Coinbase, Bitfinex and others. While other crypto exchanges “suffer” from users constantly complaining from large fees, Robinhood will explore the sweet spot of zero-fee crypto transacting.
Robinhood was later rumoured to be preparing for an IPO. But prior to this, the company has reportedly decided to expand its portfolio of services and has applied for a bank charter to expand into credit cards and deposits.
That move is considered to be a strategic one, probably planned by Robinhood’s first CFO, Jason Warnick, who was a “powerhouse” at Amazon for around 20 years.
Essentially, Robinhood has applied to launch an FDIC-insured online bank and to offer its customers a higher interest rate on deposits and a lower rate on secured credit cards. The company is reportedly looking to offer deposit accounts that do not have minimum fees and balances. The application was filed on April 19th, 2019.