Just months after a rolled-back attempt at offering banking-like deposit accounts, Robinhood Markets Inc. is taking a deeper dive into the banking industry.
The mobile app-focused securities trading company has applied for a bank charter with the Office of the Comptroller of the Currency, Robinhood said April 19.
"This is a first step towards being granted a national bank charter which would allow Robinhood to offer traditional banking products and services," the company said in an emailed statement.
The application comes on the heels of Robinhood's December 2018 announcement that it would start offering a checking and savings account backed by the Securities Investor Protection Corp. But it reversed course after the SIPC stated it only guaranteed funds used for purchasing securities, not deposits held as cash. Robinhood began working to rebrand the launch as a cash management feature soon after, and it still plans to launch the cash management feature as an offering for brokerage customers.
But receiving a bank charter would allow it to open a full-service bank alongside its trading business. The bank it hopes to launch would be a subsidiary of Robinhood Markets Inc., the company said.
The strategy of opting for full OCC charter is also a different tack from other financial technology and digital-focused financial services companies that have pursued an industrial loan company charter or considered the OCC's recently unveiled special-purpose fintech charter.
If the charter is approved, Robinhood's bank would be one of the highest-profile de novos in recent years. Another fintech, Varo Money Inc., received preliminary approval for its own charter for Varo Bank NA in September 2018. Varo has billed itself as the first digital-only bank in the U.S.
Robinhood's ambitions may go beyond rolling out simple checking and savings accounts. It hired Scott Racusin, the former president and CEO of Wedbush Bank, more than a year ago and has named him as the proposed CEO and president of the bank, according to the company.
Racusin is also the former CEO of Merchants Bank of California NA, a troubled institution that was fined $7 million in February 2017 over Bank Secrecy Act and anti-money laundering violations that occurred between 2012 and May 2016, according to the OCC's consent order. Racusin led Merchants Bank of California from January 2016 to 2018 and was at the helm during its voluntary closure in July 2018.