Robinhood, the popular investing app, is taking a significant step towards becoming a full-fledged financial services company with the launch of its online banking platform, Robinhood Banking. The new service, set to debut later this year, will offer checking and savings accounts to Robinhood Gold subscribers, with features that aim to rival traditional banks.

One of the most notable aspects of Robinhood Banking is its promise to deliver physical cash "on-demand right to your doorstep." While details on how this will work are scarce, the company notes that coverage will vary based on geographic location. This move is likely an attempt to make up for the lack of physical bank branches, providing customers with a convenient way to access cash.

Robinhood Banking will offer a 4% annual percentage yield (APY) and FDIC insurance of up to $2.5 million on accounts. However, it's essential to note that Robinhood is not an FDIC-insured bank itself. Instead, it's offering "pass-through" insurance provided by FDIC member Coastal Community Bank. This means that customers' funds will be insured by holding them "at an FDIC-insured bank through a third party," according to the FDIC.

In addition to individual and joint banking accounts, Robinhood Banking will also offer options to create children's accounts. Deepak Rao, Robinhood Money's general manager and vice president, stated that the platform is designed to "solve many of the challenges presented by legacy banks." This move marks a significant expansion of Robinhood's services, which have traditionally focused on investing and trading.

Robinhood is also launching a new wealth management platform called Robinhood Strategies, which will offer access to a mix of single stocks and exchange-traded funds (ETFs) actively managed to provide access to more opportunities. The funds will have a 0.25% annual management fee, with a yearly cap of $250 for Robinhood Gold members. Robinhood Strategies is available to Gold members today, with a broader rollout planned for next month.

Later this year, Robinhood also plans to launch an AI-powered investment tool called Cortex for Gold subscribers. Cortex will provide analyses and insights about the current market, including why a particular stock is going up or down, as well as which stocks to consider trading. This move further solidifies Robinhood's position as an all-in-one hub for users' finances.

Over the years, Robinhood has transformed itself from a simple investing app into a comprehensive financial services platform. The company launched a credit card in 2024 as part of efforts to encourage people to keep their money within the Robinhood ecosystem. With the introduction of Robinhood Banking, users will now be able to store and withdraw cash to make investments on the app, further integrating their financial lives.

The launch of Robinhood Banking and related services marks a significant shift in the fintech landscape. As traditional banks face increasing competition from digital-first financial services companies, Robinhood's move is likely to put pressure on incumbent players to adapt and innovate. With its user-friendly interface and competitive features, Robinhood Banking is poised to attract a significant share of the market.