Robinhood deepens ties with JPMorgan by using bank for money transfers ahead of expected IPO

Robinhood deepens ties with JPMorgan by using bank for money transfers ahead of expected IPO

Robinhood, the free-trading app that helped drive a surge in retail investing during the pandemic, has switched to using JPMorgan Chase to handle crucial money transfers into customers' accounts.

The start-up emailed customers this week to say that it is now using JPMorgan, the biggest U.S. bank by assets, to process transactions for cash management accounts. It had previously used Ohio-based Sutton Bank, a community lender with 8 branches.

"This change is part of a larger effort to make a more consistent and reliable experience, and it will enhance our ability to meet your cash management needs," Robinhood said in the email.

The move illustrates the ways in which traditional banks are both a competitor with and an enabler of the new guard of fintech players like Robinhood, which has quickly amassed more than 13 million users drawn to free trades and a slick interface. JPMorgan CEO Jamie Dimon has repeatedly warned shareholders that fintech and Big Tech players are encroaching on his industry's territory.

"Many of these new competitors have done a terrific job in easing customers' pain points and making digital platforms extremely simple to use," Dimon said this month in his annual investor letter. "From loans to payment systems to investing,