[Editor’s note: A new report by Axios suggests Robinhood may be running into regulatory issues. According to the report, “Stephen Harbeck, the president and CEO of the SIPC, tells Axios that he never heard from Robinhood before the announcement, and that he will not insure such a product.”]
Fintech giants Revolut and Robinhood are aiming to transform the banking sector for customers who are looking for a safe place to store, exchange and spend their money, and they’re doing it while supporting cryptos.
UK-based fintech company Revolut, which aims to become the “Amazon of banking,” has been granted a European banking license. The Bitcoin-friendly startup will offer full customer banking accounts with insurance of up to €100,000 through the European Deposit Insurance Scheme (EDIS).
Revolut plans to implement the license in early 2019, starting with a focus on the United Kingdom, France and Poland.
Revolut founder and CEO Nik Storonsky says,
“With the banking licence now secured, commission-free stock trading progressing well and five new international markets at final stages of launch, we are living up to our reputation as the “Amazon of banking”. Our vision is simple: one app with tens of millions of users, where you can manage every aspect of your financial life with the best value and technology.”
Last year, Revolut started offering cryptocurrency trading services in addition to offering global money transfers with real exchange rates, spending overviews, budgeting control and a savings feature. The company also plans on rolling out commission-free trading in 2019.
In addition to their in-app cryptocurrency exchange, Revolut offers a debit card which can receive cash back in crypto.
Revolut supports five cryptocurrencies.
Storonsky decided to jump on the crypto train last year.
“Cryptocurrency exposure has consistently been the number one requested feature from our customers and so we listened and took action.”
Storonsky says the outlook for his company’s services don’t stop there.
“Our vision is that retail and business customers will be able to apply for a loan in just two minutes from within the app, and then have the money in their account almost instantly. We’ll remove the bureaucratic process and come in cheaper than traditional lenders.”
Launched in July 2015, Revolut currently transacts over $4 billion per month in volume.
Meanwhile, Menlo Park-based fintech Robinhood, which was also established in 2017, announced in a blog post published today that the company is introducing checking and savings services. The launch is a core part of the Robinhood’s strategy to revolutionize the banking industry by offering 3% interest without fees and with access to over 75,000 free ATMs.
Robinhood first started rivaling competitors such as Charles Schwab when it introduced commission-free trades in 2013. It has since amassed over six million accounts, targeting Millennials on the go with its popular stock trading app.
In February, it launched Robinhood Crypto, allowing customers to manage and invest in cryptocurrencies, stocks, ETFs, and options all in one app. The platform supports seven cryptos.
Robinhood Crypto also supports market data for 10 cryptos and is available in Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Indiana, Illinois, Iowa, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Jersey, New Mexico, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, Wisconsin, and Wyoming.
The fintech company is using its mobile edge to drive the greatest competitive advantage not only in fees but also in terms of software functionality in order to deliver an unmatched experience for banking customers. While Robinhood Checking & Savings offers personalized debit cards that can be used for free cash withdrawals, the Robinhood app allows mobile users to find the closest free ATM, pay bills, deposit or mail checks, and chat with customer support 24/7.
With an average annual interest rate on a traditional savings account at 0.09%, Robinhood’s offer highlights the low rates from legacy banks.
According to the announcement,
“With Robinhood, you’ll earn 3% on your money in both Checking & Savings, and interest compounds and is paid out daily. That’s an extra $240 a year for the average American household with $8,000 in the bank (Federal Reserve).”
However, since Robinhood has not have a bank charter, funds held are not FDIC-insured. The Federal Deposit Insurance Corporation (FDIC), an independent agency, insures consumer deposits for up to $250,000 in the event of a bank failure. Robinhood is insured by the Securities Investor Protection Corporation (SIPC), a nonprofit membership corporation that oversees broker-dealers and steps in for troubled members, with consumer protection of up to $500,000, which includes a $250,000 limit for cash.
The SIPC notes that it “does not bail out investors when the value of their stocks, bonds and other investment falls for any reason. Instead, in a liquidation, SIPC replaces the missing stocks and other securities when it is possible to do so.”
You can check out Robinhood’s early access for its checking and savings offer here. The company will kick off shipping of the new debit cards in January 2019.