- Stock trading app Robinhood is offering a high-yield cash management account after it failed to launch the product in mid-December.
- The company's first savings account endeavor was halted after it neglected to notify the Securities and Exchange Commission (SEC) or the Securities Investor Protection Corp. (SIPC) ahead of the launch. A day after its announcement, the company said it would rebrand and rename the product following pushback from regulators.
- "We believe our financial system should work for you and do more for your money," the company said in a blog post. "To help get us there, we announced plans in December to launch a new product. We made mistakes with that announcement, which led us to hit the reset button and start over from scratch."
Robinhood is partnering with Goldman Sachs, HSBC, Wells Fargo, Citibank, Bank of Baroda and U.S. Bank to offer the 2.05% interest rate account, according to CNBC.
The financial services company joins a growing category of nonbank fintechs who partner with banks to offer Federal Deposit Insurance Corp. (FDIC)-insured products, such as savings and checking accounts.
Robo-advisers Betterment and Wealthfront both launched high-yield accounts this year. Betterment initially boasted a 2.69% annual percentage yield (APY), but it has since lowered that figure to 2.04%. Wealthfront promises 2.07%.
More recently, credit monitoring service Credit Karma also entered the high-yield account fray, announcing Thursday that it would offer its first banking product, a savings account with a 2.03% APY.
While the 2.05% APY for Robinhood's new cash management account places it close to its fintech competitors, it's well above the national average of 0.10%, according to Bankrate.com.