Robinhood Withdraws Bank Charter Application
Back in April of this year, Robinhood joined the growing list of FinTechs and challenger banks applying to become full-fledged banks and receive a national charter. At the time the company said, “Robinhood’s goal is to be able to offer its customers a full suite of financial products to service their needs.” Cut to today and it seems that Robinhood is abandoning — or at least delaying — that path as they’ve now withdrawn their application with the Office of the Comptroller of the Currency (OCC).
According to CNBC, Robinhood says the decision to pull their charter application was voluntary. In a statement provided to the network, a spokesperson for the stock trading app said, “Robinhood will continue to focus on increasing participation in the financial system and challenging the industry to better serve everyone. We appreciate the efforts and collaboration of all the parties we worked with throughout this process.”
When looking at this development, it’s easy to see a few different elements at play. First the OCC’s intentions to create a Special Purpose National Bank charter program for FinTechs was struck down by a judge just weeks ago. Secondly, on the Robinhood front, the company re-introduced its Cash Management account last month, partnering with several banks to offer FDIC insurance on customer-deposited funds (you may recall that the company previously had to scrap plans for such an account after the Securities Investor Protection Corporation cast doubt on whether funds would be insured under the announced product’s structure).
Lastly it’s also worth noting that Varo Money only recently received preliminary approval of its bank charter application after initially applying in July of 2017. If granted final approval by the OCC and FDIC, it would become the first mobile-only bank to obtain such status. Commenting on the pending approval, Varo CEO and co-founder Colin Walsh said, “This is a historic moment and marks the start of a new era in banking.”
At this point it’s really unclear whether the long road or legal challenges prompted Robinhood’s move or whether they were simply satisfied with the partnerships they’ve made for the time being. It’s also possible that, with the company facing stronger competition from discount brokerages and now planning a debut in the United Kingdom, it simply has too much on its plate. Of course it’s always possible that Robinhood reapplies for a charter in the future so we’ll have to wait and see if their banking aspirations are eventually reawakened.