Investec has released new research showing that FinTechs are using partnerships with more mainstream financial services companies to offer market-leading savings products to their retail clients. By using their technology and the infrastructure of the larger banks they partner with, Investec’s analysis reveals that FinTechs can offer some of the most attractive savings account interest rates in the marketplace.
Investec, which partners with several FinTech companies to help them offer savings accounts to customers, reviewed 57 accounts from the sector. It found that the average interest rate on instant access savings accounts from FinTechs was 0.28% AER (Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once a year), which is in the top 20% of all easy access savings accounts in the market.
What’s more, FinTech providers who offer savings accounts via a partnership have some of the most competitive rates in the market. For example, Plum, whose savings product is provided by Investec, is able to pay 0.40% on easy access savings, which is the fourth most competitive rate open to UK savers looking for easy access.
The corresponding figure for notice accounts from FinTechs is 0.49% AER, which is in the top 28% of accounts in this market. For fixed rate savings deals from FinTechs, the average was 0.72% AER, which is in the top 39% of the market overall.
|Type of savings account||Average interest rate from FinTechs||Average interest rate for the market as a whole||Percentile ranking of average FinTech interest rate within the market as a whole|
|Instant access||0.28% AER||0.16% AER||Top 20%|
|Notice||0.49% AER||0.37% AER||Top 28%|
|Term deposit||0.72% AER||0.65% AER||Top 39%|
David Hunt, Head of Funding Partnerships at Investec, said: “FinTechs continue to revolutionise the retail financial services sector. With digital offerings and state of the art technology, combined with leveraging the infrastructure of larger banks, they are able to offer very attractive savings propositions whilst retaining control of their customer journey.
Andrew Hagger, Personal Finance Researcher from Moneycomms said: “Savings rates from the high street banks are close to zero, however the new digital FinTech banks offer a much more competitive alternative and still provide customers with security through FSCS protection.
“Many FinTechs are able offer attractive deals to savers because they are much leaner and don’t have the massive overheads of running and maintaining a network of high street branches.”
Investec supports several FinTech companies with their savings propositions, including Moneybox, Plum and Monzo, amongst others.