Robinhood launches 3% checking account • Hacker News Board

Re: Robinhood launches 3% checking account

#261

Post by dawnerd » Thu, Dec 13, 2018, 5:57 PM UTC

Aunche wrote: post #215

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…

> geeks who believe they have outmathed a financial firm should ask themselves "Are financial firms likely to be bad at math?" and "Are financial firms incapable of hiring their own geeks?" Moviepass was also bought by a financial firm... Come to think of it, they have many similarities. Both companies are basically handing out free money and it's unclear how they would make any profit. People speculate that both com…

Moviepass also wrongly assumed they had greater leverage with theaters. Turns out moviepass is still small beans compared to normal moviegoers.

If they had been able to work out a profit share off concessions and cheaper tickets with AMC/Cinemark/Regal/etc they might be in a different setting right now.

Re: Robinhood launches 3% checking account

#262

Post by HenryBemis » Thu, Dec 13, 2018, 5:58 PM UTC

JumpCrisscross wrote: post #208

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.

Or Forex market. With carefuul activity Forex can make an 'easy' 20% per year. Stocks I would assume would give a 7-10%.

Knowing that RH gambles your money, it gives them plenty of profit :)

Re: Robinhood launches 3% checking account

#263

Post by marnett » Thu, Dec 13, 2018, 5:59 PM UTC

guelo wrote: post #210

wool_gather wrote: post #155

Earlier quoted context omitted.

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.

plenty were personally enriched. the personal financials checked out from all angles.

Re: Robinhood launches 3% checking account

#264

Post by sonnyblarney » Thu, Dec 13, 2018, 6:00 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"

Also using the ridiculously upside down moral convention that they are somehow 'the good guys defeating the system' i.e. 'Robin Hood'.

"We wanted to do something after occupy Wall Street, you know. Something real. So, how about, get all the young people to, you know, put their money into Wall Street" is basically their 'storyboard motivation'. Which the CNN interviewer accepted without a hint of skepticism.

Re: Robinhood launches 3% checking account

#265

Post by gruez » Thu, Dec 13, 2018, 6:00 PM UTC

DINKDINK wrote: post #170

"Robinhood" steals from its users to gives to its investors: "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders" [1] "Robinhood Investing App Secretly Makes Millions Selling Millennials' User Data To HFT Firms" [2] [1] https://seekingalpha.com/article/4205379-robinhood-making-mi... [2] https://www.zerohedge.com/news/2018-09-15/robinhood-investin...

I skimmed both of your links and they both sound like https://en.wikipedia.org/wiki/Payment_for_order_flow, which is regulated. Specifically, they can't give you a worse price than what the NMS provides, so you're not getting a worse price. What's the issue here?

Re: Robinhood launches 3% checking account

#266

Post by elliekelly » Thu, Dec 13, 2018, 6:04 PM UTC

soared wrote: post #234

elliekelly wrote: post #62

Earlier quoted context omitted.

Like all "tech" companies - they're selling your data. They already do it in their brokerage accounts. Now imagine the value of knowing what you spend every single dollar on, how often you're shopping at a competitor, what time of day you're most likely to swipe your card, etc. They're SIPC insured (like a brokerge account) instead of FDIC insured (like a bank account) which is a subtle difference and ever-so-slightl…

All your credit card companies do the same.

Not like this. American Express might have paid marketing "partnerships" but Robinhood is taking it the next level.

The Gramm-Leach-Bliley Act requires "financial institutions" to give customers the opportunity to opt-out of information sharing with third-parties. GLBA doesn't permit customers to opt-out of information sharing with affiliates. Tucked on the second page of Robinhood's privacy notice[1] (which is curiously absent from their "disclosures" webpage) you'll see they have an affiliate "Chronos Research."

[1]https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...

Re: Robinhood launches 3% checking account

#267

Post by rahimnathwani » Thu, Dec 13, 2018, 6:05 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…

How did you reach your $60 estimate for debit card interchange revenue?

My rough calculation based on the data here[0] suggests it would be at least 60% lower than that:

$200 x 12 months = $2400 txn value $2400 / $35 = 69 transactions 69 * $0.35 = $24 interchange fees

What am I missing?

[0] https://www.federalreserve.gov/paymentsystems/regii-average-...

Re: Robinhood launches 3% checking account

#268

Post by tintor » Thu, Dec 13, 2018, 6:05 PM UTC

ignign0kt wrote: post #249

My credit union has 3% yield on checking. However it has requirements (direct deposit, minimum debit uses, etc) and only applies on up to $15,000. I'll be curious to see how Robinhood's will work out though since there's no cap.

Which credit union?

Re: Robinhood launches 3% checking account

#269

Post by adrr » Thu, Dec 13, 2018, 6:05 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…

Checking accounts are loss leaders for the big banks(10 billion in deposits or more) because of the Durbin amendment which caps interchange rates of debit cards to 0.05% compared to exempt debit cards which rate is around 1.5%.

Re: Robinhood launches 3% checking account

#270

Post by gruez » Thu, Dec 13, 2018, 6:07 PM UTC

jcoffland wrote: post #259

abuckenheimer wrote: post #250

Earlier quoted context omitted.

Yes HFT buys trade flow from robin hood because they make more money executing against it but that's not actually to the detriment of the people on the robin hood app. The main way HFT firms make money is by making a market, they offer to buy and sell stocks cheaper than anyone else and get paid by people crossing the spread and sometimes exchange fees. The reason robinhood trade flow is valuable to HFT firms Isn't b…

The stock market is a zero sum game. If HFTs are making money then someone else's is losing it. The other traders who's trades are closest are the most likely losers. HFTs will tell you what a great liquidity service they provide but they are doing nothing more than using the equivalent of insider information to skim the cream off the top.

>The stock market is a zero sum game. If HFTs are making money then someone else's is losing it.

But who's that "someone else"? It's not the robinhood customer, because they're getting at least the best price on NMS[1]. So what's the issue? Would you rather pay $10/trade so your trade gets posted directly to the exchange and the profit goes to some random investment bank or daytrader rather than the HFT firm?

[1] https://en.wikipedia.org/wiki/Payment_for_order_flow#Legalit...