WASHINGTON – The fintech brokerage Robinhood was forced to rebrand its cash management product last year after misleading marketing caused a backlash among bankers and others.
The company had suggested its backing from the Securities Investor Protection Corp. was akin to the Federal Deposit Insurance Corp., but criticism from bankers, SIPC and others forced Robinhood to backtrack.
The OCC will certainly weigh Robinhood’s missteps in December in its consideration of the company’s application, but it wouldn’t necessarily prevent them from being granted a national bank charter, said Chris Cole, executive vice president and senior regulatory counsel at the Independent Community Bankers of America.
The company’s banking arm, Robinhood Bank, would be separate from the brokerage service, a Robinhood spokesperson said.
The OCC charter application “Is a first step towards being granted a national bank charter which would allow Robinhood to offer traditional banking products and services,” said Jack Randall, the company spokesperson.
Like its current brokerage arm, Robinhood Bank would be centered on a smartphone app and would require no monthly fee.
Robinhood would have to overcome several obstacles to obtain national bank status, which no fintech has yet accomplished.