Robinhood, the popular online brokerage app, has been on a mission to democratize finance and make investing accessible to everyone. But its CEO, Vlad Tenev, has also been vocal about the problems of the traditional banking system, which he says is exploiting Americans and charging them exorbitant fees.
Robinhood offers free checking and savings accounts
In an interview with CNN Business, Tenev said that Robinhood is offering a better alternative to big banks, which he accused of “ripping off” customers with hidden fees, overdraft charges, and low interest rates.
“Americans are getting ripped off by the big banks. They’re paying $35 billion a year in overdraft fees, they’re paying ATM fees, they’re paying monthly maintenance fees, and they’re earning basically nothing on their deposits,” Tenev said.
He added that Robinhood’s checking and savings accounts, which launched in 2021, are free of any fees and offer a 3% annual percentage yield, which is much higher than the national average of 0.06%.
“We think that’s a much better deal for customers. And we think that’s the future of banking,” he said.
Robinhood faces regulatory scrutiny and lawsuits
However, Robinhood’s vision of disrupting the financial industry has not been without challenges. The company has faced regulatory scrutiny and lawsuits over its role in the GameStop trading frenzy earlier this year, when it temporarily restricted buying of certain stocks that were driven up by a Reddit-fueled rally.
Tenev defended Robinhood’s decision, saying that it was necessary to comply with capital requirements and protect the firm and its customers from market volatility.
He also said that Robinhood has been transparent and cooperative with regulators, and that it has taken steps to improve its customer service, education, and safety features.
“We’re always looking to do better, we’re always looking to learn from our experiences, and we’re always looking to improve the product and the service that we offer to our customers,” he said.
Robinhood plans to go public in 2023
Despite the controversies, Robinhood has been growing rapidly, reaching over 31 million users and generating $959 million in revenue in 2021. The company is also preparing to go public in 2023, in what is expected to be one of the most anticipated IPOs of the year.
Tenev said that going public is a natural milestone for Robinhood, and that it will allow the company to reach more investors and expand its product offerings.
He also said that he is not worried about the competition from other online brokers, such as E-Trade, Schwab, and Fidelity, which have also slashed their trading fees to zero in recent years.
“We welcome competition. We think competition makes us better, it makes the industry better, and ultimately it benefits the customers,” he said.
He added that Robinhood’s competitive edge lies in its user-friendly design, its loyal and engaged community, and its mission to empower people to take control of their financial lives.
“We’re very focused on building the best product for our customers, and we think that’s what’s going to drive our success in the long term,” he said.
