Monzo Launches New Savings Accounts
Mobile banking app Monzo has teamed up with another fintech company, OakNorth, to offer its customers high-interest savings accounts for the first time.
Monzo is a mobile-only bank that works through an app and prepaid debit cards. Launched in 2015, the company has been growing rapidly in popularity and now boasts around 1.6 million customers. Their new partnership will allow their customers to open up a range of savings accounts powered by OakNorth.
The app currently allows customers to put their money in ‘savings pots’, however they don’t offer any interest. The new range of savings accounts start with an instant-access account with 1% AER, up to 1.53% AER with a 12-month fixed-term account. The bank is also offering two ISA accounts. Their instant-access cash ISA offers 1.14% AER, while their 12-month fixed-term cash ISA offers 1.38% AER. However, none of the new accounts are better than the current rate of inflation, which was at 1.9% in February, according to the ONS.
The instant-access cash ISA will be the first one available to customers, starting from Monday 25 March. The other savings accounts will be made available to open soon after. To open a savings account with Monzo, customers will have to deposit a minimum of £500, and will be able to save up to £500,000 across all their accounts. With their cash ISAs, customers will be able to deposit up to £20,000 each tax year.
“ISAs and higher interest rates on savings are something our customers have been asking for, so we’re really excited to be launching them in time for the end of this tax year,” said Tom Blomfield, co-founder and chief executive of Monzo. “Partnerships like this one are part of our plan to give customers more choice and control over their money. We want to give our customers access to a wide range of products and services from across the market, so they can choose what works for them and get an overall view of their finances.”
Monzo have announced that their partnership with OakNorth is not exclusive, and they are working on teaming up with other savings providers in the future. Although Monzo’s new savings accounts are appealing to their growing customer base, customers can in fact deposit money into savings accounts with higher interest rates by going directly to OakNorth.
Both Monzo and OakNorth are two of the most valuable fintech companies in the UK right now. Monzo reached a billion-dollar valuation last year, while OakNorth recently announced a 220% increase in profits, from £10.6 million in 2017 up to £33.9 million last year.
“Since our launch in September 2015, we have proven our ability in the UK savings market, providing tens of thousands of British savers with the opportunity to make a better return on their savings,” said Amir Nooriala, chief operating officer at OakNorth. “Through this partnership with Monzo, we’re opening up the marketplace for the millions of savers who could benefit from better rates, whilst also giving them the added benefits of ease, convenience and usability that come with managing money in one place.”