Robinhood Takes Another Swipe at Legacy Banking, Offers Checking and Savings Accounts

December 14, 2018 / by Angel Reyes

Robinhood is taking on the legacy banking system in much the same way that Bitcoin has taken on the world financial system.

In keeping with its tradition of commission-free trading, Robinhood Markets Inc. took a step toward disrupting the legacy banking system and launched a zero fee checking and savings accounts for users.

After initially taking on traditional trading platforms and brokerages, Robinhood attempts to appeal to its customer base with offers of free access to 750,000 ATMs and a whopping three percent interest on deposited funds. That’s as compared to the paltry interest banks have traditionally offered.

Its entirely digital customer service platform allows for paying bills, depositing checks and 24/7 customer service. Similar to crypto markets, this offers accessibility to those who are positioned poorly to participate in legacy banking due to high fees and generally shady practices.

Robinhood has recently been approved to operate its own clearinghouse, another step in its attempts to unilaterally approach banking. Its intent is to remove all possible fees for its customers. Robinhood’s plan is to profit mainly from transaction fees associated with card use by striking a deal to split existing fees with MasterCard.

“We want to build a financial services company that democratizes America’s financial system,” Robinhood said in a company blog post.

It is likely that simultaneous attacks on legacy banking from different fronts, crypto and banking, in this case, will be necessary to revolutionize the financial system. An ecosystem takes multiple aspects to operate, all dependent on each other to thrive.

In this ecosystem, Robinhood’s new service offers a user-friendly way to become involved in banking and savings without the need for large quantities of capital. It’s unfair that charges affect those with the least money first, people who are often unable to pay outrageous fees.

Both crypto and Robinhood are accessible from anywhere with wifi or a cell signal, whereas banks can require physical visitation. This is another plus for accessibility in an age when people are busier than ever.

In combination with Robinhood’s offering of crypto earlier this year, the addition of legacy banking services may help bridge the gap between user-friendly platforms and the crypto world. With more than six million users and the likelihood of more who will take advantage of these new services, Robinhood could become a major onboarding gateway for those new to crypto.

Unfortunately, however, when trading in crypto on Robinhood, the exchange maintains full control over wallet addresses, disallowing sending or receiving. While this is great for those who only want to invest, it greatly negates any potential for financial sovereignty through cryptocurrency.

In other developments, Robinhood’s recent hire of Jason Warnick, a former 20-year Amazon employee heralds the company’s impending IPO and its plans to expand into Europe in the near future.

We think these developments bode well for Robinhood and the crypto space in general. We’ll be following this story closely to see how things go for the company, its innovations and their effect on the crypto space.