ECONOMÍA DIGITAL

Robinhood raises stakes on deposits with 3% interest paying accounts

03 de Enero, 2019

Tiempo estimado de lectura: 4 minutos

Commission-free trading startup Robinhood has upped the ante on the battle for consumer deposits with the launch of high interest rate paying accounts, per the company’s blog post

Customers will earn 3% annually on deposits in the accounts. As well as offering the highest interest rate on the market, the accounts, which come with a debit card, have no minimum balance requirement and no fees, including for foreign transactions and overdrafts.

The company doesn’t have a bank charter, so it will offer these services through its existing broker-dealer license. As such, this is an added feature to existing Robinhood accounts and is not a separate account or a bank account, per the company’s website. Robinhood is a member of the Securities Investor Protection Corporation (SIPC), which protects up to $250,000 worth of customers’ cash deposits. However, as of yet, it’s unclear whether these protections apply to the newly added features, after Stephen Harbeck, SIPC president and CEO, told Bloomberg that the funds may not be protected.

The startup’s interest rate significantly undercuts established lenders and is likely to attract their customers’ deposits. Robinhood has grown rapidly of late, adding 2 million customers to its trading platform between May and October 2018, which took its user base to 6 million, per CNBC. Expanding its suite of products allows the firm to cross-sell to this already considerable user base, likely at a low customer acquisition cost. Moreover, US banks, on average, pay 0.06% interest for checking and 0.09% on savings accounts, per the Federal Deposit Insurance Corporation (FDIC) cited by Reuters.

 Robinhood is also likely to attract users looking to get higher returns on their deposits, even if they haven’t been interested in its trading services. That it’s already built up a massive user base should significantly add to its pulling power, heaping further headaches on incumbents.

Robinhood’s move is the latest indication that the disruption of the US retail banking segment is beginning to gain momentum. The US neobank market is someway off its European counterpart, where a number have gained full banking licenses. However, that more and more fintechs and challenger brands are offering high-interest products to cash in on the interest inertia at major lenders suggests this is beginning to shift. Goldman Sachs’ Marcus has gained significant traction with its 2.05% interest paying savings account, while Simple is offering 2.02% on deposits of over $2,000, for instance.

 That the likes of Robinhood are now expanding out of their core propositions to attract their customers’ deposits is a stark warning that competition is brewing. These upstarts have no legacy technology infrastructure or network of branches to support — allowing them to undercut going rates. Incumbents need to take note of the challenges posed by these agile, and typically more efficient, players, or they risk disruption to their market share.

 Fuente: businessinsider.com

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