Robin Hood thread


(Kenny Grant) #1

This is an interesting play to become a full spectrum financial services provider, not just an investment app.

Edit - this link now redirects to the main robinhood page as they have withdrawn their checking account offer for now.


#2

That is a very good interest in this day and age


(Kenny Grant) #3

Yes it has to be a loss leader if the money is lent without risk, but perhaps they’re doing something clever behind the scenes (like investing in the stock market or bonds!). Perhaps just a loss leader to draw people in though, as they don’t expect their market to have much disposable cash.

Interesting that they’ve decided to try to grow their userbase by adding banking (and perhaps then because of the integrated investment draw in people who would not otherwise be interested in investing).


(Only available in amateur ) #4

Might not be as good as first thought. Basically they don’t think deposited funds are protected

https://www.bloomberg.com/news/articles/2018-12-14/sipc-says-it-has-serious-concerns-about-robinhood-s-new-product


(MikeF) #5

The original Robin Hood wasn’t renowned for protecting people’s investments…


(Only available in amateur ) #6

I’ve always thought it was a strange name. It’s not like they’re taking money off anyone and redistributing it.


#7

I always assumed (I’ve never looked into why they are called what they are), that it was taking money from the legacy trading platforms/brokers (whatever the correct terminology is), and giving it back to “the people”.

It was Robinhood that started off my “FinTech” fascination!


(Simon B) #8

I like their card design! :grinning:


(Splodf) #9

There’s always that!! :rofl:


(Kenny Grant) #10

It is a little odd, looks like they’re depending on SIPC insurance, but the regulator are not at all happy with that (as noted in your article) as they traditionally cover investment accounts, not banking, and also to get 3% the funds might be invested in bonds, which carries some risk (however slight). All very complicated, far more so than you’d expect from a bank. I think I’d rather my bank focus on traditional banking and integrate with third parties as Monzo hopefully will.

[edit got regulator name wrong quoting from tweet :blush:]

https://twitter.com/iankar_/status/1073256687803490307

I really like the card too. I hope at some point Monzo consider getting rid of the horrible misaligned embossed type imposed by the card manufacturer and doing something a little more daring with their cards. I love the colour but don’t like much else about the current Monzo card.


(Simon B) #11

We’re always looking at ways to improve our card, and the embossed thing is definitely something we feel could be improved on. That’s just really about finding a viable alternative - having a printed PAN isn’t without problems either, but there’s some new technologies that could make it work… watch this space!


(Kenny Grant) #12

Exciting. I await the new flashy Monzo card with bated breath!


(Kenny Grant) #13

Turns out the money is invested in bonds to get that return, so not really what people think of when talking about a bank account.

An update from the founders here:


#14

Many US banks and investment companies offer money market accounts which are invested in low risk investments such as US treasury bills. From a consumer viewpoint they are considered to be a savings account because they perform in the same manner as a UK savings account. The accounts support cheque payments and immediate transfers between accounts. Technically there is an investment risk but that risk is minimal and normally ignore by consumers.


(Graham - Mental health professional) #15

I, on the other hand, await the rather less flashy, slightly understated, yet elegant, new Monzo card :star_struck:

(Too many commas…?).


#16

You ordered a new investor card then Graham.


(Graham - Mental health professional) #17

I did indeed. :sunglasses:


(Simon B) #18

A post was merged into an existing topic: Freetrade: Free Share Trading


(Dan) #19

Well that didn’t last long!

https://www.bloomberg.com/opinion/articles/2018-12-17/robinhood-checking-moved-fast-and-broke

A quote from the article:

Looks like they didn’t work with the regulators at all. And it turns out they can’t offer a current account/accept deposits because they’re not a bank. Who would have thought? :man_shrugging:t2:


(Kenny Grant) #20

Reassuring at least to see that regulators still have some sort of bite and can rein in attempts to blur boundaries like this. I suspect they’ll reintroduce it with different clearer naming, making it clear it is a prepaid card attached to an account which is able to purchase certain products (which I imagine would be covered by SIPC if the customer invested directly).

I have mixed feelings about this - it was shady and troubling for RobinHood to offer this as a checking/savings account as they are not a bank (i.e. a bank account, which have very stringent requirements), it wasn’t even clear at first what they were doing and the entire story only came out slowly, but in our current negative real interest rate environment, it’s a shame that more people don’t look at other places to invest than cash if they have larger amounts to park. Customers do need to be cognizant of the risk though and informed about what they are purchasing.