Admittedly, I’ve been a bit down on FinTech in recent years. That’s mostly thanks to the Yotta/Synapse/Evolve debacle, which brought to light some major issues and misconceptions about neobanking services. In turn, while I still use plenty of financial technology apps and a few neobanks, these days, the vast majority of my money is held directly with licensed banks (which I even just made a video about). However, a recent experience reminded me why FinTech disruption was necessary in the first place and continues to have a leg up on some legacy services.
As you may recall, April 15th is Tax Day. So, naturally, I waited until the weekend before to start my return (hey, when you know you’re going to need to pay, all urgency disappears). What’s more, since I was trying to determine the most advantageous IRA contribution amounts, I didn’t let my wife know that figure until the night before filing.
Unfortunately, when she went to make a transfer to her PNC IRA during her lunch break, she was informed that same-day transfers were only allowed before 2 p.m. Eastern. Since it was a few minutes past that, she was not only locked out from completing her transfer on the day but was, in turn, unable to assign her contribution to the 2025 tax year. In other words, she was SOL.
Enter Robinhood. On my recommendation, last year, she opened a traditional IRA with the brokerage app. Because of this, once she hit a wall with PNC, she decided to head back to Robinhood. The only problem was that her PNC IRA was a Roth, and she preferred to contribute to a Roth this time around. Well, with just a couple of taps, she was able to open a new Roth IRA within Robinhood, make her contribution, and assign it to the right tax year.
To recap, the traditional bank/brokerage couldn’t facilitate a transfer in the middle of the day because it was already “too late.” In contrast, the FinTech didn’t just let her make the contribution but even enabled her to open a new account for the purpose! Oh, and thanks to Robinhood’s IRA Match feature, she got a 1% bonus on top of it.
Personally, I think this is a great reminder of why FinTechs were even created: the financial systems we had were just antiquated, and institutions rested too comfortably on their laurels. Granted, some of these restrictions were safeguarding matters — but definitely not all. Thus, while FinTech may be experiencing some growing pains as of late, I continue to believe that they’ve been a net good overall.
So, while many banks and other institutions have made major advances over the years, it seems that some still haven’t gotten the memo. That’s why I’m glad that there are still FinTech innovators out there to pick up the slack and show these establishment services what’s possible. And to PNC, as a pretty woman once said, “Big mistake. Huge.”