The news: UK-based money transfer fintech Wise launched an interest-bearing savings account dubbed Interest, per Bloomberg. Interest will roll out in the UK before expanding across Europe.
Funds held in the account can be spent or sent via the Wise app. Wise will offer 3.29% interest for balances in American dollars, 2.52% for balances in British pounds, and 0.88% for balances in euros.
The opportunity: The savings accounts can help Wise compete more aggressively with remittance rivals and tighten customer loyalty.
The problem: Wise doesn’t have a banking license in the UK, which means customer funds held in its savings account aren’t protected by UK deposit laws.
The UK’s Financial Services Compensation Scheme protects up to £85,000 ($100,000) worth of deposits for bank and credit union customers. With an abundance of interest-earning savings accounts on the market, customers shopping around may prefer to hold their money with a traditional bank or licensed fintech.
Our take: Not having a banking license might make it hard for Wise’s savings accounts to enter the mainstream. But they could still be beneficial because Wise can use them for cross-sell opportunities and to help stand out in the money transfer space.
The bigger picture: While legacy remittance firms struggle to sustain volume growth, Wise has been ramping up its product suite. The fintech plans to increase its headcount by 250 next year, in sharp contrast with the wider macroeconomic headwinds affecting the tech sector.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
One Liberty Plaza9th FloorNew York, NY 100061-800-405-0844