Robinhood Markets, the mobile trading app that has more customers than E*TRADE, is eyeing the personal banking market, aiming to launch services including savings accounts.
Citing people familiar with the matter, Bloomberg reported that, while Robinhood isn't allowed to offer banking services in its current form, it is in initial talks with regulators about offering banking products via a direct license or by inking partnerships. One person familiar with the discussions said that the company has had talks with the Office of the Comptroller of the Currency, which is in charge of national banks and federal savings associations and issues charters. Bloomberg noted that nothing may come of the talks, and the plans to offer banking services may not come to fruition.
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While the discount brokerages aren't offering personal finance-type services like bank accounts, the fintechs are. Social Finance, the online lender, and Stash Financial have both rolled out banking products this year, noted Bloomberg. The idea, according to Bloomberg, is that the more digital services these fintechs offer, the deeper the relationship they will have with their customers. That, in turn, builds loyalty and enables the companies to retain more customers. It's also aimed at luring consumers away from the big banks by providing services that are more convenient to use and have higher interest rates.
The talk of a potential entry into the banking industry comes at a time when Robinhood is in growth mode, announcing in May that it reached more than 4 million users and recently raised $363 million in capital, giving it a valuation of $5.6 billion. The $363 million in venture funding came via a Series D round led by DTS Global and included new investors Iconiq, Capital G, Sequoia Capital and Kleiner Perkins. Existing investors NEA and Thrive Capital also took part in the round of fundraising. In comparison, E*TRADE Financial Corporation (ETFC) ended the March quarter with 3.7 million brokerage accounts.
"In the past few months, we launched more products to further our mission of democratizing financial services, and brought your investments together on one platform," Robinhood wrote in a blog post in May. "We released a web platform with research and discovery tools, introduced commission-free options trading, and launched Robinhood Crypto, with commission-free cryptocurrency trading, now available in 10 states." The company said that it will use the capital it raised to accelerate its product expansion, invest in its infrastructure and operations, and hire more staffers.