Cash Management will offer bank-like services, including debit cards and FDIC coverage on deposits.
retooling how it would offer cash management services and making sure that this time, it wouldn’t raise any red flags with industry watchdogs or regulators.“Our entire business was built knowing we weren’t going to be charging trading commissions,” said Co-Chief Executive Vlad Tenev said. “We’ll still have existing revenue streams, and in addition we’ll add revenue from interchange on debit card transactions.
Cash Management will offer bank-like services — including debit cards and Federal Deposit Insurance Corp. coverage on deposits — through a partnership with an existing bank, unlike Checking & Savings, which did not have such a partnership. The product represents a scaling back of banking ambitions for the start-up, which had originally planned to become a bank itself. But last month, the companyfor a national banking charter. Being granted such a license would have allowed the company to offer checking accounts, debit cards and similar services on its own. No fintech start-up has so far successfully won a charter.
The debut of Cash Management comes after several other financial technology start-ups have rolled out their own banking services, leading to an increasingly crowded field. Betterment and Wealthfront Corp. also have their own versions of cash management services, as do more traditional competitors such as Charles Schwab Corp.At the same time, Robinhood’s main business of free stock trading is also seeing more competition. Over the last several months, Charles Schwab, ETrade Financial Corp.
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