American start-up Robinhood announced that it has decided to withdraw its application to become a federally insured bank. The application had been submitted earlier in 2019. The company has revealed that it withdrew the application voluntarily. The California based startup offers commission-less crypto and stock trading services to its users.
However, the move from Robinhood does illustrate the difficulties faced by startups when it tries to disrupt the financial system. A Robinhood spokesperson 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.”
While it is true that this is a major setback for Robinhood and the wider Fintech industry, it should be noted that the industry has the capability of offering a wide range of products. The products in question can compete with the biggest names in banking without regulatory approval, as well.
However, to accomplish that, the company would need to have a partner bank. That being said, it is important to mention that a source, which is familiar with the matter, stated that the withdrawal does not signal a change in Robinhood’s aims.
