Crypto friendly banking will be upon us before we know it. We have some great news coming from the UK and the US today – Revolut and Robinhood have separately announced new products that could be a boon for the crypto industry in the long-term. This is just the next step in our industry that threatens traditional financial institutions and cryptocurrency hostile banks and could force them to modernize their offerings.
Revolut, a UK based service, recently was valued at $1.7 billion dollars, has announced that it had received a European banking license. This will position Revolut to start offering insured bank accounts to its more than 3 million customers as soon as the first half of 2019.
Revolut, whose app already features a built-in cryptocurrency exchange, will soon support commission-free stock trading. They also plan on offering traditional personal and business loans within the near future.
“With the banking license now secured, commission-free stock trading progressing well and five new international markets at final stages of launch, we are living up to our reputation as the ‘Amazon of banking,'” said Nikolay Storonsky, the CEO and founder of Revolut. “Our vision is simple: one app with tens of millions of users, where you can manage every aspect of your financial life with the best value and technology… Our vision is that retail and business customers will be able to apply for a loan in just two minutes from within the app, and then have the money in their account almost instantly. We’ll remove the bureaucratic process and come in cheaper than traditional lenders.”
Across the pond, US stock trading app and Silicon Valley favorite Robinhood has also expressed interest in becoming a licensed banking institution. While the firm has yet to receive a license, it did take a major step in becoming a viable digital banking alternative.
Hours after Revolut’s announcement, Robinhood, valued at $5.6 billion, announced that its more than 6 million customers could begin registering for early access to its new zero-fee checking and savings service. Their products would offer an industry-leading 3% interest rate. Already, ads on Facebook have heralded Robinhood’s foray into the checking and savings market.
Robinhood plans on offering the service through its broker-dealer license and says cash deposits will be insured by the Securities Investor Protection Corporation (SIPC) up to $250,000, similar to FDIC insurance. Customers will receive a free debit card, as well as zero-fee withdrawals at more than 75,000 ATMS across the US.
Robinhood operates similarly to Revolut, operating an in-app cryptocurrency exchange alongside its stock-trading platform. The service is available at more than half of the US, and executives have said that it expects to be the largest crypto trading platform within the near future.
From Robinhood co-founder and co-CEO Baiju Bhatt in May: “We expect by the end of the year to be either the largest or one of the largest crypto platforms out there. But we also really feel we’ll have the absolute best experience for investing in crypto as well – from having a large variety of coins available to a more favorable cost structure – mainly no commissions – to just quality of product.”
Revolut and Robinhood aren’t the only fintech companies wanting to provide a digital alternative to conventional banks – nor are they the only ones to do so with an eye towards cryptocurrency adoption.
Square, the digital payments startup that allows customers to trade Bitcoin through its app Cash App, previously applied for a banking license but withdrew its request in July. The firm plans on refiling the paperwork in the future but kept mum as to when this would happen.
Coinbase and Circle are also in the early stages with regulators about registering themselves as banks, but it’s not clear as to whether or not these conversations will lead to any firm and resolute action.
It’s clear that Revolut and Robinhood have a specific demographic in mind with these product offerings – younger users who are mobile-first. However, with natural growth, it wouldn’t be shocking if they expanded their target demographics to include business customers as well.
Revolut has already announced its intentions to offer business loans with its loan offerings. Coupled with offering business checking accounts, Revolut could fill a sorely needed niche – offering a seamless and total product that effortlessly fulfills the needs of a business while simultaneously offering cryptocurrency integration. This is an incredibly huge opportunity for the cryptocurrency industry that could push mass adoption to the forefront.
This is in stark contrast to many traditional financial institutions that have eschewed and even outright rejected cryptocurrency projects and cryptocurrency as a whole. The possibility of having cryptocurrency friendly banking solutions would solve many problems that currently plague the industry and many cryptocurrency based startups.
Case in point – Chile. Chile’s Supreme Court recently ruled that banks could discriminate against cryptocurrency exchanges – this effectively prevents local firms and businesses from offering fiat-to-cryptocurrency trading, therefore hampering the growth of the crypto industry.
Working alongside crypto is a calculated risk – something that many major Wall Street institutions have rejected and have decided not worth it. However, smaller Main Street banks like Silvergate have scooped up huge partnerships with crypto giants like Coinbase, Kraken, Genesis Global Trading, and bitFlyer USA.
Revolut’s Niolay Storonsky predicts that fintech will continue to lead the charge for mass adoption of cryptocurrency. Whether or not Wall Street and their financial institutions play catch up or push their heads into the sand is irrelevant.
“Fintech will be very big in crypto for the foreseeable future,” he said. “I just don’t think banks will catch up.”
While it’s too early to hail the offerings of Robinhood and Revolut as the death knell for traditional financial institutions, it is a major boon and should serve as a changing of the guard – cryptofriendly banking alternatives will vastly push crypto adoption to the forefront. Financial institutions should start listening to their customers and sense the change in the wind – lest they fall behind and are deemed irrelevant by future upcoming generations.
What do you think? There’s a lot of good news coming into the market for cryptocurrency ecosystem. We know the markets are slumped – we’ve known this for the entire year of 2018. But moves are being made to mass adopt cryptocurrency. Financial institutions are coming into the space. Retail investors are too. Just yesterday, TD Ameritrade announced that they’re exploring options of adding cryptocurrency to their platform. Do you think 2019 will be drastically different from 2018? Let us know on our Facebook page.
