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BankThink Robinhood’s stumble is a wake-up call - ABI

That is why the Consumer Bankers Association and its member institutions have been growing increasingly concerned as new nonbank financial institutions enter the deposit space. It is not out of a fear of competition — after all there are more than 5,000 banks across the country, so competition is something banks are well prepared for and accustomed to. What is a concern, however, is the differences in protections these accounts offer consumers.  We are concerned promoting “insured” accounts by nonbanks and FinTechs' could leave consumers with the false impression these accounts are just as safe as those in the well-regulated, FDIC-insured banking industry.  Just last week, Robinhood Financial, a large non-bank financial service company, introduced its take on the traditional bank account. The new offering, Robinhood Checking & Savings, promised a 3% interest rate. Robinhood pitched the service to its roughly six million customers as being akin to a traditional checking or savings account with debit cards and ATM access. The marketing material used by Robinhood described the product as a traditional banking product.

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