Robinhood’s attempt to launch a disruptive, first-of-its-kind product offers some lessons for fintech companies trying to break the mold in a highly regulated industry.
On Thursday, the popular stock-trading start-up rolled out what executives said was the biggest announcement in the company’s history: Checking and savings products with a 3 percent interest rate, and zero fees. But just a day later, the start-up un-winded its ambitious plan.
There were a number of questions about the product — but mostly on the regulatory side.
The accounts being offered by Robinhood were insured by the Securities Investor Protection Corporation, or SIPC. Those protections are a far cry from FDIC-checking and savings accounts, which have different capital requirements and are equipped to handle bank failures or a run on a bank.
Read more in CNBC to see what fintechs can learn from this failed venture.