Home Fashion Industry Financial Robinhood, Revolut and PayPal play business model musical chairs

Robinhood, Revolut and PayPal play business model musical chairs


Perhaps it is the onset of fall that prompts companies to seek summer elsewhere in hopes of finding greener grass.

At least three well-known financial services companies will soon be testing their ability to launch new products outside of their usual silos, in territory more closely associated with equally established players.

Another possible explanation, invoking what is called the sincerest form of flattery, might take a Halloween turn – like in which costume Robinhood, for example, would he like to wear? Coinbase, maybe?

Robinhood, best known for its app that aims to democratize stock trading, will beta-test crypto wallets with select clients next month, the company said on Wednesday in a blog post.

The wallets will allow Robinhood clients to own digital assets, consolidate them into one account, and move them in and out of the app to pay for goods and services. Users can now simply trade cryptocurrencies, but this feature accounted for around 41% of Robinhood’s net income in the second quarter, according to Bloomberg. The press service announced the extension of Robinhood’s capabilities on Monday when a developer found clues about the new activity in the company’s app code.

Robinhood’s customer base apparently doesn’t lack enthusiasm for crypto. Almost 300,000 users signed up to the wallet waiting list within hours of receiving a push notification announcing the product, the Financial Time reported. The post, in vintage Robinhood fashion, featured a high-five emoji.

“We’re not the first to market – we’ve taken our time to make sure we’re building this in a phased approach,” said Aparna Chennapragada, Robinhood Product Manager, told CNBC.

Portfolio beta testers will share their comments on the Robinhood blog and Twitter, the company said.

Robinhood’s digital asset business has grown significantly in the three years since the company started trading in crypto. About 60% of the accounts funded on Robinhood traded crypto assets in the second quarter, the company told the Financial Times. The company posted second-quarter revenue of $ 233 million from crypto trading, according to the publication. That’s $ 5 million over the same three-month period a year ago. Robinhood had $ 22.7 billion in crypto assets in custody as of June 30 – a nearly 30-fold jump from the previous year, the Financial Times reported.

Chennapragada noted that the company is “completely aligned with our regulators and [Securities and Exchange Commission] to make sure we’re working on it with educational tools, with protection, with security.

Some security features include identity verification, multi-factor authentication, and email and phone verification, she said.

Revolut attacks the stock market

While Robinhood may be checking the fit of his Coinbase suit, Revolut appears to be trying out Robinhood’s. The UK-based neobank, best known recently for its efforts to obtain a US banking license, is preparing to roll out commission-free equity trading in the coming months, the company said on Tuesday.

Revolut obtained a broker’s license in the United States through the Financial Industry Regulatory Authority (FINRA) – a process that took 16 months, Ron Oliveira, head of the US operations of Revolut, told CNBC.

The regulator “took a deep dive – they asked a lot of questions because they wanted to see exactly what the consumer experience was,” Oliveira said. “It took them a while to get comfortable, but we’re very happy they got there. “

Under the license, Revolut is approved as an “introductory broker” and will rely on fintech partner DriveWealth to clear transactions, Oliveira said.

The upcoming ability will allow users to buy exchange-traded funds and shares of companies listed on the New York Stock Exchange and Nasdaq, Oliveira said, adding that it will eventually allow users to purchase fractions of stocks and invest the spare currency of card transactions.

Although a company executive told CNBC in 2019 that its European operations would not depend on payment for order flow – a practice that has sparked a backlash from the SEC, especially around Robinhood – the will Revolut’s business in the United States, a spokesperson for the company told the network.

The neobank is looking to glean business from the 20 million reported investors who have started trading stocks since the start of the COVID-19 pandemic.

PayPal is considering an inventory platform

Revolut is not alone. PayPal is also considering launching a stock trading platform, CNBC reported last month.

It’s not the only new line of business that PayPal is considering, however. The fintech is looking to launch a savings account in the coming months – in partnership with Synchrony – which offers an annual percentage return of 0.4%, Bloomberg reported on Tuesday. This is akin to the 0.5% interest that Goldman Sachs’ Marcus savings accounts generate, but more than six times the national average, according to Bankrate.

“The past 12 to 18 months have been among the most productive in terms of product pace in company history,” Julian King, senior vice president of PayPal Consumer, told Bloomberg. “We should expect to continue this pace of innovation.”

PayPal also wants to add investment capabilities, new ways to pay in stores and launch a feature that allows users to message each other after peer-to-peer payments on its site, according to the press service.