After a year in the making, we’re thrilled to announce the launch of our High-Yield Cash API. Starting today, our partners around the world can enable their customers to earn up to 4.50% APR (4.59% APY)*1 on USD deposits; all managed through our Broker API platform. This milestone marks yet another important step in furthering our global commitment to open financial services to everyone on the planet.
For Your Business
Grow
At its core, High-Yield Cash provides a top-of-funnel growth mechanism that empowers our partners to win cash deposits from both new and existing customers. With $16 trillion of deposits at banks in the US alone2, there is a large addressable market globally that our partners will now have the tools to tap into. This has shown to be a non-trivial growth mechanism in the US B2C Fintech market, as we’ve seen with roboadvisor Wealthfront accumulating nearly 50% of total AUM in high-yield cash deposits totaling $27 billion3 and brokerage incumbent Robinhood achieving 128% YoY growth in high-yield cash deposits totaling $18 billion4.
Prosper
With our API comes the optionality for partners to share in interest revenue, allowing them to configure their own take rate or pass it down to boost customer APR/APY. Whether for extending runway, reaching profitability, or increasing profitability as a business, maximizing customer APR/APY at scale can still lead to noteworthy revenue. Revisiting the US examples above, the high-yield cash model helped Wealthfront to double its annual revenue to $200m and reach profitability for the first time as a private company3, while Robinhood was able to book $39m in high-yield cash revenue in Q14 alone earlier this year to extend its profitability as a public company.
Customize
Product and Engineering teams at Alpaca meticulously optimized the High-Yield Cash API for developer experience and flexibility. What this translates to in practice is partners having near-complete control over their cash strategy and customer experience. With account-level APR/APY configurability that can be changed as frequently as daily, partners are free to dream up custom qualifying activity and/or rate boost marketing campaigns segmented by individuals or groups of customers.
For Your Customers
Income
Enrolled final mile customers can earn up to 4.50% APR (4.59% APY)*1 on their USD deposits. For US customers, this is nearly 10x the national average**5 and highly competitive amongst B2C fintech comparable product offerings. For ex-US customers, High-Yield Cash is intended to provide a principally protected store of value in USD to help defend against local inflation and currency devaluation. Whether managing a cash sleeve within a larger portfolio strategy, building dry powder between trades, or simply seeking a local bank deposit alternative, near endless use cases have the opportunity to earn on cash positions.
Safety
High-Yield Cash deposits are protected by up to $1,000,000 FDIC insurance per customer***6 at launch. The Federal Deposit Insurance Corporation (FDIC) plays a critical role in providing stability and confidence in the US financial system. In the event of a bank failure, the FDIC’s Deposit Insurance Fund ensures that depositors are made whole up to $250,000 per FDIC-insured bank,****and is backed by the full faith and credit of the US government. Since the FDIC’s founding in 1933, customers have not lost even a single penny of FDIC-insured deposits despite every bank failure event over the last 90+ years7. As the High-Yield Cash program grows, we will continually seek to increase the FDIC insurance coverage limits in order to extend protection for the needs of high-net-worth customers.
Liquidity
Enrolled deposits enjoy the same daily liquid properties that cash on Alpaca’s platform benefits from today. High-Yield Cash balances are available to withdraw, transfer, and use as immediate buying power for trading activity to take advantage of market opportunities as they present themselves. Given that it’s all operated out of the same Alpaca account, customers can say goodbye to multi-business-day transfers between bifurcated high-yield cash and investing product experiences, which is still a common area of user friction in the industry today.
Get Started
Whether you’re a neobank, roboadvisor, brokerage, or fintech platform, we’re here to support your growth strategy with a high-yield offering through this interest rate cycle and future ones to come.
- For prospective partners, please reach out to Alpaca’s Sales team at [email protected].
- For existing partners, please contact your Customer Success Manager (CSM) or email the Success team at [email protected].
*Please note that this interest rate is effective as of September 19, 2024, and is subject to change and may not be the interest rate on the date this is read.
**The FDIC reports the national average savings account interest rate. This current interest rate is 0.46 APY, effective September 16, 2024, and is subject to change and may not be the interest rate on the date this is read.
***The FDIC insures $250,000 per customer per deposit bank. Alpaca currently has multiple deposit banks. Please note that this figure will also change if the number of deposit banks changes.
****Securities in brokerage accounts are insured by SIPC and not the FDIC.
1. Federal Reserve Bank of New York. (2024). Effective federal funds rate. Effective Federal Funds Rate - FEDERAL RESERVE BANK of NEW YORK. Retrieved October 16, 2024, from <https://www.newyorkfed.org/markets/reference-rates/effr>
2. Federal Deposit Insurance Corporation. (2024). Statistics At A Glance As of June 30, 2024. fdic.gov. Retrieved October 16, 2024, from <https://www.fdic.gov/system/files/2024-08/fdic-2q2024.pdf>
3. Kauflin, J. (2024). How Wealthfront Finally Became Profitable After 14 Years. Forbes.com. Forbes Magazine. Retrieved October 16, 2024, from <https://www.forbes.com/sites/jeffkauflin/2024/06/03/how-high-interest-rates-turbocharged-a-struggling-robo-advisor/?sh=7079fc311947>
4. Robinhood. (2024). Robinhood Q1 2024 earnings presentation. Robinhood.com. Retrieved October 16, 2024, from <https://s28.q4cdn.com/948876185/files/doc_financials/2024/q1/Q1-2024-Earnings-Presentation.pdf>
5. Federal Deposit Insurance Corporation. (2024). Monthly Update – September 2024. fdic.gov. Retrieved October 16, 2024, from <https://www.fdic.gov/national-rates-and-rate-caps/monthly-update-september-2024>
6. Federal Deposit Insurance Corporation. (2024a). What we do. fdic.gov. Retrieved October 16, 2024, from <https://www.fdic.gov/about/what-we-do>
7. Federal Deposit Insurance Corporation. (2024a). The history of FDIC. fdic.gov. Retrieved October 16, 2024, from <https://www.fdic.gov/90years/>
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