Wealthfront CEO Andy Rachleff recently revealed plans for new banking services set to launch next year, calling the company’s roadmap for the future “self-driving money.”
The news comes just a few days after the company announced that it would begin connecting its customers with mortgages. Additional offerings expected by the end of the first quarter in 2020 include a debit card, automated bill pay and direct deposit, while the second half of the year should include additional automated features such as rerouting leftover money into clients’ investment portfolios.
Earlier this year, the company launched the Wealthfront Cash Account, which offered clients a 2.24 percent interest rate—20 times higher than the national average. By April the accounts had brought in $1 billion in customer deposits, prompting Wealthfront to raise the interest rates to 2.29 percent. Its rate beats Goldman Sachs’ Marcus, which offers 2.25 percent on its savings accounts, as well as Ally Bank and Barclays, both at 2.2 percent.
Wealthfront currently works with nine different financial institutions, including Pasadena, Calif.'s East West Bank, Green Bay's Associated Banc-Corp, Pittsburgh's TriState Capital Bank, Citibank and Wells Fargo, allowing it to offer up to $1 million in FDIC insurance.
As the California-based company goes after customers of traditional banks, Rachleff was asked what Wealthfront can offer that these banks cannot.
“First and foremost, we can be fairer to our customers,” Rachleff said in an interview with American Banker Editor at Large Penny Crosman at SourceMedia's In|Vest West conference. “Everyone hates their cable guy and everyone hates their banks.”
Wealthfront currently has $22 billion in its client savings and investment accounts, including more than $13 billion in assets under management.
While the company has competition from multiple sectors, Rachleff has learned from experience how to handle rivals. He pointed to his previous role as a venture capitalist, when he served on a board that turned down Netflix CEO Reed Hastings’ idea for the streaming service multiple times.
“One of the things that I learned from Reed is you ignore your competition, because following your competition can't cause you to lead,” Rachleff said. “In technology, you can't come from behind by out-executing the leader.”