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December 14, 2018
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Robinhood said to not be properly insured to offer checking & savings

in Apps/Banking/Delhi/eCommerce/fdic/Finance/Government/India/Policy/Politics/Robinhood/Robinhood Checking and Savings/SEC/Startups/TC by

Robinhood’s new high-interest, zero-fee checking and savings feature seems to be too good to be true. Users’ money may not be fully protected. The CEO of the Securities Investor Protection Corporation, a non-profit membership corporation that insures stock brokerages, tells TechCrunch its insurance would not apply to checking and savings accounts the way Robinhood claims. “Robinhood would be buying securities for its account and sharing a portion of the proceeds with their customers, and that’s not what we cover” says SIPC CEO Stephen Harbeck. “I’ve never seen a single document on this. I haven’t been consulted on this.”

That info directly conflicts with comments from Robinhood’s comms team, which told me yesterday users would be protected because the SIPC insures brokerages and the checking/savings feature is offered via Robinhood’s brokerage that is a member of the SIPC.

If Robinhood checking and savings is indeed ineligible for insurance coverage from the SIPC, and since it doesn’t qualify for FDIC protection like a standard bank, users’ funds could be at risk. Robinhood co-CEO Baiju Bhatt told me that “Robinhood invests users’ checking and savings money into government-grade assets like US treasuries and we collect yield from those assets and pay that back to customers in the form of 3 percent interest.” But Harbeck tells me that means users would effectively be loaning Robinhood their money, and the SIPC doesn’t cover loans. If a market downturn caused the values of those securities to decline and Robinhood couldn’t cover the losses, the SIPC wouldn’t necessarily help users get their money back. 

Robinhood’s team insisted yesterday that customers would not lose their money in the event that the treasuries it invests in decline, and that only what users gamble on the stock market would be unprotected as is standard. But now it appears that because Robinhood is misusing its brokerage classification to operate checking and savings accounts where it says users don’t have to invest in stocks and other securities, SIPC insurance wouldn’t apply. “I have an issue with some of the things on their website about whether these checking and savings accounts would be protected. I refered the issue to the SEC” Harbeck tells me. TechCrunch has reached out to the SEC and will update if we hear back about its perspective on the issue.

Robinhood planned to start shipping its Mastercard debit cards to customers on December 18th with users being added off the waitlist in January. That might need to be delayed due to the insurance problem. We’ve repeatedly asked Bhatt and Robinhood’s team for a formal statement and clarification this morning, but have not heard back.

Robinhood touted how its checking and savings features have no minimum account balance, overdraft fees, foreign transaction fees, or card replacement fees. It also has 75,000 free-to-use ATMs in its network, which Bhatt claims is more than the top five US banks combined. And its 3 percent interest rate users earn is much higher than the 0.09% average interest rate for traditional savings, and beats  most name brand banks outside of some credit unions.

But for those perks, users must sacrifice brick-and-mortar bank branches that can help them with troubles, and instead rely on a 24/7 live chat customer support feature from Robinhood. The debit card has Mastercard’s zero-liability protection against fraud, and Robinhood partners with Sutton Bank to issue the card. But it’s unclear how the checking and savings accounts would be protected against other types of attacks or scams.

Robinhood was likely hoping to build a larger user base on top of its existing 6 million accounts by leveraging software scalability to provide such competitive rates. It planned to be profitable from its margin on the interest from investing users’ money and a revenue sharing agreement with Mastercard on interchange fee charged to merchants when you swipe your card. But long-term, Robinhood may use checking and savings as a wedge into the larger financial services market from which it can launch more lucrative products like loans.

But that could fall apart if users are scared to move their checking and savings money to Robinhood. Startups can suddenly fold or make too risky of decisions while chasing growth. Robinhood’s valuation went from $1.3 billion last year to $5.6 billion when it raised $363 million this year. That puts intense pressure on the company to grow to justify that massive valuation. In its rush to break into banking, it may have cut corners on becoming properly insured.

[DIsclosure: The author of this article knows Robinhood co-founders Baiju Bhatt and Vlad Tenev from college 10 years ago]

News Source = techcrunch.com

This early GDPR adtech strike puts the spotlight on consent

in Advertising Tech/Android/Apps/Artificial Intelligence/China/data processing/data protection/Delhi/Europe/European Union/Facebook/Fidzup/GDPR/General Data Protection Regulation/Google/India/location based services/mobile advertising/mobile device/online advertising/Politics/privacy/retail/smartphone/TC/terms of service by

What does consent as a valid legal basis for processing personal data look like under Europe’s updated privacy rules? It may sound like an abstract concern but for online services that rely on things being done with user data in order to monetize free-to-access content this is a key question now the region’s General Data Protection Regulation is firmly fixed in place.

The GDPR is actually clear about consent. But if you haven’t bothered to read the text of the regulation, and instead just go and look at some of the self-styled consent management platforms (CMPs) floating around the web since May 25, you’d probably have trouble guessing it.

Confusing and/or incomplete consent flows aren’t yet extinct, sadly. But it’s fair to say those that don’t offer full opt-in choice are on borrowed time.

Because if your service or app relies on obtaining consent to process EU users’ personal data — as many free at the point-of-use, ad-supported apps do — then the GDPR states consent must be freely given, specific, informed and unambiguous.

That means you can’t bundle multiple uses for personal data under a single opt-in.

Nor can you obfuscate consent behind opaque wording that doesn’t actually specify the thing you’re going to do with the data.

You also have to offer users the choice not to consent. So you cannot pre-tick all the consent boxes that you really wish your users would freely choose — because you have to actually let them do that.

It’s not rocket science but the pushback from certain quarters of the adtech industry has been as awfully predictable as it’s horribly frustrating.

This has not gone unnoticed by consumers either. Europe’s Internet users have been filing consent-based complaints thick and fast this year. And a lot of what is being claimed as ‘GDPR compliant’ right now likely is not.

So, some six months in, we’re essentially in a holding pattern waiting for the regulatory hammers to come down.

But if you look closely there are some early enforcement actions that show some consent fog is starting to shift.

Yes, we’re still waiting on the outcomes of major consent-related complaints against tech giants. (And stockpile popcorn to watch that space for sure.)

But late last month French data protection watchdog, the CNIL, announced the closure of a formal warning it issued this summer against drive-to-store adtech firm, Fidzup — saying it was satisfied it was now GDPR compliant.

Such a regulatory stamp of approval is obviously rare this early in the new legal regime.

So while Fidzup is no adtech giant its experience still makes an interesting case study — showing how the consent line was being crossed; how, working with CNIL, it was able to fix that; and what being on the right side of the law means for a (relatively) small-scale adtech business that relies on consent to enable a location-based mobile marketing business.

From zero to GDPR hero?

Fidzup’s service works like this: It installs kit inside (or on) partner retailers’ physical stores to detect the presence of user-specific smartphones. At the same time it provides an SDK to mobile developers to track app users’ locations, collecting and sharing the advertising ID and wi-fi ID of users’ smartphone (which, along with location, are judged personal data under GDPR.)

Those two elements — detectors in physical stores; and a personal data-gathering SDK in mobile apps — come together to power Fidzup’s retail-focused, location-based ad service which pushes ads to mobile users when they’re near a partner store. The system also enables it to track ad-to-store conversions for its retail partners.

The problem Fidzup had, back in July, was that after an audit of its business the CNIL deemed it did not have proper consent to process users’ geolocation data to target them with ads.

Fidzup says it had thought its business was GDPR compliant because it took the view that app publishers were the data processors gathering consent on its behalf; the CNIL warning was a wake up call that this interpretation was incorrect — and that it was responsible for the data processing and so also for collecting consents.

The regulator found that when a smartphone user installed an app containing Fidzup’s SDK they were not informed that their location and mobile device ID data would be used for ad targeting, nor the partners Fidzup was sharing their data with.

CNIL also said users should have been clearly informed before data was collected — so they could choose to consent — instead of information being given via general app conditions (or in store posters), as was the case, after the fact of the processing.

It also found users had no choice to download the apps without also getting Fidzup’s SDK, with use of such an app automatically resulting in data transmission to partners.

Fidzup’s approach to consent had also only been asking users to consent to the processing of their geolocation data for the specific app they had downloaded — not for the targeted ad purposes with retail partners which is the substance of the firm’s business.

So there was a string of issues. And when Fidzup was hit with the warning the stakes were high, even with no monetary penalty attached. Because unless it could fix the core consent problem, the 2014-founded startup might have faced going out of business. Or having to change its line of business entirely.

Instead it decided to try and fix the consent problem by building a GDPR-compliant CMP — spending around five months liaising with the regulator, and finally getting a green light late last month.

A core piece of the challenge, as co-founder and CEO Olivier Magnan-Saurin tells it, was how to handle multiple partners in this CMP because its business entails passing data along the chain of partners — each new use and partner requiring opt-in consent.

“The first challenge was to design a window and a banner for multiple data buyers,” he tells TechCrunch. “So that’s what we did. The challenge was to have something okay for the CNIL and GDPR in terms of wording, UX etc. And, at the same time, some things that the publisher will allow to and will accept to implement in his source code to display to his users because he doesn’t want to scare them or to lose too much.

“Because they get money from the data that we buy from them. So they wanted to get the maximum money that they can, because it’s very difficult for them to live without the data revenue. So the challenge was to reconcile the need from the CNIL and the GDPR and from the publishers to get something acceptable for everyone.”

As a quick related aside, it’s worth noting that Fidzup does not work with the thousands of partners an ad exchange or demand-side platform most likely would be.

Magnan-Saurin tells us its CMP lists 460 partners. So while that’s still a lengthy list to have to put in front of consumers — it’s not, for example, the 32,000 partners of another French adtech firm, Vectaury, which has also recently been on the receiving end of an invalid consent ruling from the CNIL.

In turn, that suggests the ‘Fidzup fix’, if we can call it that, only scales so far; adtech firms that are routinely passing millions of people’s data around thousands of partners look to have much more existential problems under GDPR — as we’ve reported previously re: the Vectaury decision.

No consent without choice

Returning to Fidzup, its fix essentially boils down to actually offering people a choice over each and every data processing purpose, unless it’s strictly necessary for delivering the core app service the consumer was intending to use.

Which also means giving app users the ability to opt out of ads entirely — and not be penalized by not being able to use the app features itself.

In short, you can’t bundle consent. So Fidzup’s CMP unbundles all the data purposes and partners to offer users the option to consent or not.

“You can unselect or select each purpose,” says Magnan-Saurin of the now compliant CMP. “And if you want only to send data for, I don’t know, personalized ads but you don’t want to send the data to analyze if you go to a store or not, you can. You can unselect or select each consent. You can also see all the buyers who buy the data. So you can say okay I’m okay to send the data to every buyer but I can also select only a few or none of them.”

“What the CNIL ask is very complicated to read, I think, for the final user,” he continues. “Yes it’s very precise and you can choose everything etc. But it’s very complete and you have to spend some time to read everything. So we were [hoping] for something much shorter… but now okay we have something between the initial asking for the CNIL — which was like a big book — and our consent collection before the warning which was too short with not the right information. But still it’s quite long to read.”

Fidzup’s CNIL approved GDPR-compliant consent management platform

“Of course, as a user, I can refuse everything. Say no, I don’t want my data to be collected, I don’t want to send my data. And I have to be able, as a user, to use the app in the same way as if I accept or refuse the data collection,” he adds.

He says the CNIL was very clear on the latter point — telling it they could not require collection of geolocation data for ad targeting for usage of the app.

“You have to provide the same service to the user if he accepts or not to share his data,” he emphasizes. “So now the app and the geolocation features [of the app] works also if you refuse to send the data to advertisers.”

This is especially interesting in light of the ‘forced consent’ complaints filed against tech giants Facebook and Google earlier this year.

These complaints argue the companies should (but currently do not) offer an opt-out of targeted advertising, because behavioural ads are not strictly necessary for their core services (i.e. social networking, messaging, a smartphone platform etc).

Indeed, data gathering for such non-core service purposes should require an affirmative opt-in under GDPR. (An additional GDPR complaint against Android has also since attacked how consent is gathered, arguing it’s manipulative and deceptive.)

Asked whether, based on his experience working with the CNIL to achieve GDPR compliance, it seems fair that a small adtech firm like Fidzup has had to offer an opt-out when a tech giant like Facebook seemingly doesn’t, Magnan-Saurin tells TechCrunch: “I’m not a lawyer but based on what the CNIL asked us to be in compliance with the GDPR law I’m not sure that what I see on Facebook as a user is 100% GDPR compliant.”

“It’s better than one year ago but [I’m still not sure],” he adds. “Again it’s only my feeling as a user, based on the experience I have with the French CNIL and the GDPR law.”

Facebook of course maintains its approach is 100% GDPR compliant.

Even as data privacy experts aren’t so sure.

One thing is clear: If the tech giant was forced to offer an opt out for data processing for ads it would clearly take a big chunk out of its business — as a sub-set of users would undoubtedly say no to Zuckerberg’s “ads”. (And if European Facebook users got an ads opt out you can bet Americans would very soon and very loudly demand the same, so…)

Bridging the privacy gap

In Fidzup’s case, complying with GDPR has had a major impact on its business because offering a genuine choice means it’s not always able to obtain consent. Magnan-Saurin says there is essentially now a limit on the number of device users advertisers can reach because not everyone opts in for ads.

Although, since it’s been using the new CMP, he says a majority are still opting in (or, at least, this is the case so far) — showing one consent chart report with a ~70:30 opt-in rate, for example.

He expresses the change like this: “No one in the world can say okay I have 100% of the smartphones in my data base because the consent collection is more complete. No one in the world, even Facebook or Google, could say okay, 100% of the smartphones are okay to collect from them geolocation data. That’s a huge change.”

“Before that there was a race to the higher reach. The biggest number of smartphones in your database,” he continues. “Today that’s not the point.”

Now he says the point for adtech businesses with EU users is figuring out how to extrapolate from the percentage of user data they can (legally) collect to the 100% they can’t.

And that’s what Fidzup has been working on this year, developing machine learning algorithms to try to bridge the data gap so it can still offer its retail partners accurate predictions for tracking ad to store conversions.

“We have algorithms based on the few thousand stores that we equip, based on the few hundred mobile advertising campaigns that we have run, and we can understand for a store in London in… sports, fashion, for example, how many visits we can expect from the campaign based on what we can measure with the right consent,” he says. “That’s the first and main change in our market; the quantity of data that we can get in our database.”

“Now the challenge is to be as accurate as we can be without having 100% of real data — with the consent, and the real picture,” he adds. “The accuracy is less… but not that much. We have a very, very high standard of quality on that… So now we can assure the retailers that with our machine learning system they have nearly the same quality as they had before.

“Of course it’s not exactly the same… but it’s very close.”

Having a CMP that’s had regulatory ‘sign-off’, as it were, is something Fidzup is also now hoping to turn into a new bit of additional business.

“The second change is more like an opportunity,” he suggests. “All the work that we have done with CNIL and our publishers we have transferred it to a new product, a CMP, and we offer today to all the publishers who ask to use our consent management platform. So for us it’s a new product — we didn’t have it before. And today we are the only — to my knowledge — the only company and the only CMP validated by the CNIL and GDPR compliant so that’s useful for all the publishers in the world.”

It’s not currently charging publishers to use the CMP but will be seeing whether it can turn it into a paid product early next year.

How then, after months of compliance work, does Fidzup feel about GDPR? Does it believe the regulation is making life harder for startups vs tech giants — as is sometimes suggested, with claims put forward by certain lobby groups that the law risks entrenching the dominance of better resourced tech giants. Or does he see any opportunities?

In Magnan-Saurin’s view, six months in to GDPR European startups are at an R&D disadvantage vs tech giants because U.S. companies like Facebook and Google are not (yet) subject to a similarly comprehensive privacy regulation at home — so it’s easier for them to bag up user data for whatever purpose they like.

Though it’s also true that U.S. lawmakers are now paying earnest attention to the privacy policy area at a federal level. (And Google’s CEO faced a number of tough questions from Congress on that front just this week.)

“The fact is Facebook-Google they own like 90% of the revenue in mobile advertising in the world. And they are American. So basically they can do all their research and development on, for example, American users without any GDPR regulation,” he says. “And then apply a pattern of GDPR compliance and apply the new product, the new algorithm, everywhere in the world.

“As a European startup I can’t do that. Because I’m a European. So once I begin the research and development I have to be GDPR compliant so it’s going to be longer for Fidzup to develop the same thing as an American… But now we can see that GDPR might be beginning a ‘world thing’ — and maybe Facebook and Google will apply the GDPR compliance everywhere in the world. Could be. But it’s their own choice. Which means, for the example of the R&D, they could do their own research without applying the law because for now U.S. doesn’t care about the GDPR law, so you’re not outlawed if you do R&D without applying GDPR in the U.S. That’s the main difference.”

He suggests some European startups might relocate R&D efforts outside the region to try to workaround the legal complexity around privacy.

“If the law is meant to bring the big players to better compliance with privacy I think — yes, maybe it goes in this way. But the first to suffer is the European companies, and it becomes an asset for the U.S. and maybe the Chinese… companies because they can be quicker in their innovation cycles,” he suggests. “That’s a fact. So what could happen is maybe investors will not invest that much money in Europe than in U.S. or in China on the marketing, advertising data subject topics. Maybe even the French companies will put all the R&D in the U.S. and destroy some jobs in Europe because it’s too complicated to do research on that topics. Could be impacts. We don’t know yet.”

But the fact of GDPR enforcement having — perhaps inevitably — started small, with so far a small bundle of warnings against relative data minnows, rather than any swift action against the industry dominating adtech giants, that’s being felt as yet another inequality at the startup coalface.

“What’s sure is that the CNIL started to send warnings not to Google or Facebook but to startups. That’s what I can see,” he says. “Because maybe it’s easier to see I’m working on GDPR and everything but the fact is the law is not as complicated for Facebook and Google as it is for the small and European companies.”

News Source = techcrunch.com

Google’s parental control software Family Link now supports Chromebooks

in Apps/children/chromebooks/Delhi/family/family link/Google/India/kids/mobile/parental controls/parents/Politics by

Since its public debut in fall 2017, Google’s parental control software dubbed Family Link, has been steadily expanding, both in terms of its capabilities and its reach. Today, it’s making the jump beyond smartphones for the first time, with newly added support for Chromebook computers. As on Android devices, parents will now be able to manage their child’s use of a Chromebook – including by setting time limits, managing the apps that can be downloaded, setting content filters, and more.

As a Family Link household ourselves, I’ve found I prefer managing my child’s device from a single, dedicated app, rather than having to dig around in the iPhone’s settings – as I did when my daughter used to tote an iPod. (Parental controls moved to “Screen Time” on iOS 12, by the way, in case you’re wondering where the “Restrictions” section went).

With Family Link, you can configure nearly every aspect of device usage, including content restrictions on apps, movies, TV, and other media. Helpfully, you can enable settings across the Google ecosystem, as well. For example, you can turn on Google’s SafeSearch, enable a mature content filter in Chrome (or even limit Chrome to select websites), disable the child’s access to third-party apps on Google Assistant, and more.

You can also track your child’s location, locate or ring a lost device (you’ll do this often), and monitor and manage screen time and device bedtime schedules.

Now parents can configure these sorts of settings on a Chromebook, too. (However, only select Chromebooks support Google Play apps.)

The expansion makes Chromebooks a more compelling option for families. Already, there are a number of affordable Chromebooks that will work well for the child’s first computer, but Family Link can also work on a shared device, Google says.

That is, the software can manage the child’s account when they’re logged in. Parents can also manage the child’s Google account from Family Link and remotely lock a supervised account, if need be.

The support for Family Link on Chromebooks follows the shutdown of Chrome’s parental controls earlier this year. At the time, we suspected that the features would make their way over to Family Link in the months ahead.

News Source = techcrunch.com

Facebook Watch is finally growing as payouts get spread thin

in Apps/Delhi/Entertainment/Facebook/Facebook Watch/Facebook Watch Party/Fidji Simo/India/Media/mobile/Politics/Social/streaming video/TC by

Both Facebook Watch and Instagram’s IGTV have yet to become superstar video platforms, leaving Facebook at risk as more people seek streaming entertainment instead of status updates. So today Facebook is trying to build some buzz for Watch with new stats and rollouts. The free video hub that combines original content, sports, and cult favorite TV shows like Firefly now has 400 million users watching at least one minute per month. That’s not a ton of engagement amongst a wide audience. But on the brighter side there are 75 million users watching at least one minute per day with a much more promising average of 20 minutes per day.

Though that’s just 5 percent of Facebook’s 1.5 billion daily users, it indicates that if Facebook can get people hooked on its ad-supported shows, it could squeeze serious viewing time out of them. Just four months ago, Facebook was saying that only 50 million people spent at least 1 minute per month on Watch, so it’s making strong progress.

Watch is now available worldwide on desktop and Facebook Lite as well as the main Facebook app. And it’s rolling out ad breaks to 40 countries after an initial launch in 5 in August. It’s also renewing four shows for a second season: Huda BossFive PointsSacred Lies & Sorry For Your Loss.

But The Information reports that news media executives feel that while some shows are getting satisfactory viewership, ad revenue has been underwhelming. Six months ago, Facebook commissioned news programs from outlets like CNN and Buzzfeed. Facebook reportedly now plans to pay news video content producers less per show as it seeks to spread the same $90 million budget across more programs, potentially with a greater focus on international markets. That cut-back could make producing some shows tough, but at least the execs believe Facebook understands it must prioritize monetization for its content partners.

To the end, Facebook plans to offer more options for advertisers like more targeting capabilities, and expanding its In-Stream Reserve premium ad inventory inside the top quality Watch shows. For individual video creators, Ad Breaks will become more widely available including within game streams from eSports stars. Facebook is also planning to expand its Brand Collabs Manager to additional countries so creators can get hooked up with sponsorship deals, and let more creators sign up fans for Patreon-style subscription payments.

The viewing stats have likely been bolstered by the addition of all episodes of Joss Whedon’s old TV shows Buffy The Vampire Slayer, Angel, and Firefly that users can binge watch for hours on end. 12 million Watch Party group video sessions have been launched to date, helping shows go viral. Facebook is now testing live picture-in-picture commentating that could let actors host viewing parties that feel like you’re sitting in the living room beside them. Facebook’s VP of video Fidji Simo writes that “With Facebook Watch, we set out to demonstrate what it looks like to build deep bonds through watching online video, instead of just having a passive viewing experience.”

Simo also notes that “People can find videos on Facebook in a number of different places — Watch, News Feed, Search, Pages and more — and all of these can feel different. We want to make the experience of watching video feel immersive no matter where you discovered it. As part of this effort, we’ll be testing a few things in the coming months, like creating a darker background whenever you immerse yourself into a video on mobile.”

Facebook has yet to concentrate its funding on a blockbuster tentpole video series — its Game Of Thrones or House Of Cards. The closest thing it has is the Elizabeth Olsen show Sorry For Your Loss, though viewership has been somewhat weak. Next year Facebook Watch will debut a revived and social media-infused web version of MTV’s Real World. But tapping its deep pockets to pay for one must-see original scripted series could help wedge Watch into people’s lives.

News Source = techcrunch.com

Robinhood launches no-fee checking/savings with Mastercard & the most ATMs

in Apps/Banking/Delhi/eCommerce/Finance/India/mobile/Politics/Robinhood/Startups/TC by

Robinhood is undercutting the big banks by forgoing brick-and-mortar branches with its new zero-fee checking and savings account features. With no overdraft or monthly fees, a juicy 3 percent interest rate, and a claim of more US ATMs than the five biggest banks combined, Robinhood is using the scalability of software to pass impressive perks on to customers. The free stock trading app already used that approach to attack brokers like E*Trade and Charles Schwab that charge a per trade fee. Now it’s breaking into the larger financial services market with a model that could put the squeeze on Wells Fargo, Chase, and Bank Of America.

Today Robinhood launches checking and savings accounts in the US with a Mastercard debit card issued through Sutton Bank that starts shipping December 18th. Users earn 3 percent on all the dough they keep with Robinhood, yet there’s no minimum balance or fees for monthly membership, overdrafts, foreign transactions, or card replacements. That’s a pretty sweet deal compared to the other leading banks that all charge for some of that or offer much lower interest rates. The tradeoff is that while customers get 24/7 live text chat support, they won’t be able to walk into a local bank branch. 

Robinhood expects to turn a profit thanks to a lean 300-employee operation, earning a margin on investing your money in US treasuries, and a revenue share with Mastercard on interchange fees charged to merchants when you swipe. The launch could be critical to keeping Robinhood worthy of its $5.6 billion valuation from when it took a $363 million Series D in March just a year after raising at a $1.3 billion valuation. The 6 million-user app invested in launching a free cryptocurrency trading exchange early this year only to see coin prices plummet and mainstream interest fall off. But with banks hammering users with surprise fees and mediocre user experience, there’s a huge opportunity for a mobile-first startup to disrupt how we store money.

“Brick-and-mortar locations are costly. Our goal with this product was to build a completely digital experience so we can reduce our overhead so we can pass more of the value back to customers” Robinhood co-CEO Baiju Bhatt tells me. “Saving accounts in the US pay on average 0.09 percent and we all know the banks are making far more than that from the deposits. With Robinhood you earn 3 percent off all of your money. Mental math is hard so if you look at the median US household that has about $8000 in liquid savings, they’d earn $240 a year.”

Getting into banking could open a lucrative revenue stream for Robinhood as it charts its path to IPO. The startup recently hired Jason Warnick, a 20-year veteran of Amazon, to be its CFO and get it prepped to go public. Wall Street will want to see a more robust business that’s not as vulnerable to foes like stock brokerage Charles Schwab which is already lowering fees to stay competitive with Robinhood. Not only will checking and savings see users move more money into their Robinhood accounts that it can invest to earn a profit, but it also poises the startup to tackle more financial services in the future.

News Source = techcrunch.com

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