Robinhood launches 3% checking account • Hacker News Board

Re: Robinhood launches 3% checking account

#201

Post by vasilipupkin » Thu, Dec 13, 2018, 5:18 PM UTC

DINKDINK wrote: post #178

patio11 wrote: post #115

For folks trying to understand this, some context which may be useful: Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that…

>their core strategy, which is spending what would otherwise be a marketing budget on keeping commissions at zero, making money on the other ways "Making money others ways" aka stripping their clients of financial privacy by selling their clients' investment-decision data: "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders"[1] If your investment brokerage firm's strategy is…

privacy has nothing to do with it as all trades are reported anyway.

Re: Robinhood launches 3% checking account

#202

Post by C1sc0cat » Thu, Dec 13, 2018, 5:18 PM UTC

notahacker wrote: post #145

thisone wrote: post #48

Earlier quoted context omitted.

When banks in the UK have offered 3% (Tesco bank did this) it was for the first 12 months and the number of new accounts was eventually limited. from what I understand Tesco bank had purchased bonds/securities/whatevs with a 5% interest rate, so made 2% off the deal. (and a slew of new customers worth x each to the bank) Hopefully something similar is funding this

Santander offered 3% up to £20k to all customers on their main checking account but had to cut that rate in the end.

They had some sweet deals I was making just under £20 a month on cash back plus a good (for the time) interest rate.

But the half baked eu ruling on merchant fees screwed savvy investors and the banks found another way to charge merchants.

Re: Robinhood launches 3% checking account

#203

Post by pbhjpbhj » Thu, Dec 13, 2018, 5:18 PM UTC

LandR wrote: post #58

ansible wrote: post #50

Earlier quoted context omitted.

What's stopping you from opening up similar accounts with other banks?

Most banks that will give you a current account will want to see £xxxx deposited every month (e.g, your salary) to earn any interest (if they even offer interest, it's rare on a current account). I could open multiple, but then every month I'd need to spend time transfering money to each to earn the interest. Im not sure that would even count towards deposited every month, they might want to see a direct debit that i…

As a mortgage payer with no residual income "interests rates are fantastic in the UK right now", any reason I'm wrong it that framing?

Re: Robinhood launches 3% checking account

#204

Post by gigatexal » Thu, Dec 13, 2018, 5:18 PM UTC

I really, really like these new startups in this space: I super admire Robinhood and N26. I use them both and have nothing but good things to say about my time with them. I’d love to work for either of them too

Re: Robinhood launches 3% checking account

#205

Post by C1sc0cat » Thu, Dec 13, 2018, 5:20 PM UTC

LandR wrote: post #58

ansible wrote: post #50

Earlier quoted context omitted.

What's stopping you from opening up similar accounts with other banks?

Most banks that will give you a current account will want to see £xxxx deposited every month (e.g, your salary) to earn any interest (if they even offer interest, it's rare on a current account). I could open multiple, but then every month I'd need to spend time transfering money to each to earn the interest. Im not sure that would even count towards deposited every month, they might want to see a direct debit that i…

1.4 is about the best easy access cash ISA at the moment -BTW for non UK types you don't pay interest on any income in an ISA.

Re: Robinhood launches 3% checking account

#206

Post by guelo » Thu, Dec 13, 2018, 5:20 PM UTC

DINKDINK wrote: post #178

patio11 wrote: post #115

For folks trying to understand this, some context which may be useful: Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that…

>their core strategy, which is spending what would otherwise be a marketing budget on keeping commissions at zero, making money on the other ways "Making money others ways" aka stripping their clients of financial privacy by selling their clients' investment-decision data: "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders"[1] If your investment brokerage firm's strategy is…

All the big banks and Visa and MasterCard sell your transaction data to marketers.

Re: Robinhood launches 3% checking account

#207

Post by lettergram » Thu, Dec 13, 2018, 5:20 PM UTC

patio11 wrote: post #115

For folks trying to understand this, some context which may be useful: Checking accounts are loss leaders virtually everywhere, the exception being smaller community banks. Their primary revenue stream was, once upon a time, net interest income, but these days due to the extremely low interest environment and alternate sources of funding the revenue stream is more weighted towards fees (primarily NSFs, although that…

It's also a way they can secure their loans. It's the exact same reason Capital One has bank accounts along with their credit card business (and Amex doesn't). Getting credit on the open market is expensive, by getting you to sign up with your bank account, they can leverage it to get cheaper loans for buying stocks (i.e. margin accounts). Capital One targets lower income people, so it's riskier and more vulnerable to fluctuations in market conditions. Amex in contrast, targets higher income individuals so fluctuations impact then less. This they can get away not holding bank accounts and securing credit elsewhere.

This means if there's a downturn in the market, they won't go bankrupt due to all the outstanding margin accounts (or have to do margin calls).

Re: Robinhood launches 3% checking account

#208

Post by JumpCrisscross » Thu, Dec 13, 2018, 5:20 PM UTC

dixie_land wrote: post #163

I think folks are overthinking this. The math itself doesn't matter. Have you seen recent Robinhood commercials popping up on TV? Their whole business is to encourage folks that should not be day trading to day trade. Having your money parked there just facilitates knee-jerk-reaction and follow-the-crowd trading.

> Their whole business is to encourage folks that should not be day trading to day trade

Less cynically, it’s building a book of investors who have likely never lost money in the stock market.

Re: Robinhood launches 3% checking account

#209

Post by mturmon » Thu, Dec 13, 2018, 5:21 PM UTC

biomene wrote: post #164

iknowordidthat wrote: post #150

Earlier quoted context omitted.

In answer to your metacomment. The financial crisis is a strong indication that, yes financial firms can be terrible at math. Luckily, they have friends who can bail them out with taxpayer money when they fail at math.

The financial crisis was not a result of bad mathematics. Investments are made because they promise to return dividends. But there is always a chance that they might return lower than expected dividends, or none at all. This can be because the market didn't grow as expected, wages rose above expectations, a tsunami wiped out your factory or an array of other factors completely beyond your control. The best mathematic…

Not so! One can indeed defend the claim that poor mathematical modeling of the statistical properties of collateralized debt obligations (CDOs) was the underlying cause of the bottom falling out of that market.

In brief, models were constructed of the complex behaviors of packages of loans - CDOs. These models, trained under benign market conditions, did not account adequately for correlations that might make all their component loans default at once.

You can elaborate the story with a lot of context and granular detail, but the core of the crisis did have a strong element of "bad mathematics" -- bad mathematical modeling.

For more, see: https://www.maths.ox.ac.uk/system/files/attachments/1000332....

and references therein.

Re: Robinhood launches 3% checking account

#210

Post by guelo » Thu, Dec 13, 2018, 5:22 PM UTC

wool_gather wrote: post #155

iknowordidthat wrote: post #150

Earlier quoted context omitted.

In answer to your metacomment. The financial crisis is a strong indication that, yes financial firms can be terrible at math. Luckily, they have friends who can bail them out with taxpayer money when they fail at math.

Was that them being terrible at math, or them covering their eyes and singing "lalalala" to pretend the math didn't exist?

If they ignore the math for whatever reason I would call that being bad at math.