Stock and cryptocurrency trading platform Robinhood has come to realize that its goals may have extended well beyond its reach. The company had hoped to be able to begin to offer banking services and approached the U.S. Office of the Comptroller of the Currency (OCC) in order to start the application process to receive a bank charter. However, it was apparently only after submitting the initial paperwork that it discovered exactly what was involved and what would be required. When it learned the full scope of the process, it was forced to reconsider and has now withdrawn its bank charter plans.
According to CNBC, the California-based company is going to have to re-evaluate its stance, but will most likely try again in the future. It isn’t impossible for Robinhood to receive the charter; it’s just extremely difficult. Apple with Goldman Sachs and Google with Citi Bank are two examples of how FinTech companies are able to receive charters, provided they have the right partners.
A company spokesperson told CNBC, “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.”
In addition to Apple and Google, Square and Varo Money have also applied for some type of banking license. Square has gone after a special industrial loan company license and Varo Money, a mobile-only banking startup, has already received initial approval from the OCC for its banking operations. It still needs the OCC to give its final blessing, and both entities will still need to receive approval from the Federal Deposit Insurance Company.
About a year ago, Robinhood launched checking and savings account services that it said were not banking alternatives, despite having the look and feel of being the same. This move didn’t go over well with the banking community or with some lawmakers, and the plans had to be squashed. Any financial moves it tries to make are immediately going to be flagged, and the company is going to have to take a more sensible approach to its service expansion plans if it wants them to be taken seriously.
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