Savings platform looks to stir cross-border retail banking competition

By Helen Lee
When savings interest rates are low, its little wonder that people will look to other
places to invest. But to cross border lines and make deposits in countries with higher
rates throughout Europe, this potentially means complicated procedures for
customers, sometimes in foreign languages.
A Berlin-based fintech startup (previously known as SavingsGlobal), Raisin aims to
resolve this problem and encourage cross-border competition by giving customers
access to savings products across the entire European Union and European
economic area via a single platform.
Interest rates vary widely across Europe and even in individual countries. In
Germany alone there is a spread of thirty times the lowest and highest interest rates.
If you take the average of the three largest banks in Germany, they pay something
like 0.04 or 0.05 percent on a one-year term deposit, whereas even in Germany
alone you can still get up to 1.2 percent. And then when you look across borders
situations are even more different, says Katharina Lth, head of Europe for the
startup.
But with Raisin you get access to banks that are still willing to pay higher interest
rates, all the while your deposits being guaranteed by the respective national deposit
guarantee schemes off the countries where the banks are located.
The savings platform offers interest rates of up to 2.2 percent from some of its 19
partner banks, according to an April press release.
EU regulations require countries to guarantee deposits of up to 100,000 ($111,670),
which is the maximum amount that Raisin permits customers to place per bank
ensuring that deposits are 100 percent secured.
Ease of use for customers is a key factor for the platform. Although customers do
need to provide Raisin with a reference bank account when signing up, there are no
set-up fees for users. As a fully online service, customers can sign up remotely with
no need for face-to-face interaction.
Lth says the idea for Raisin was inspired by CEO Tamaz Georgadzes experience
with retail banking in the country of Georgia, where he is from.
We saw that for a Euro term deposit you can actually, or could at that point, still get
double digit interest rates on Euro denominated savings accounts and a lot of people
started asking, Hey how do I open a bank account in another country in order to get
higher interest rates? said Lth.
The original intent of Raisin was to provide those higher interest rates for customers
on a global scale, but Lth admits that from a regulatory perspective, thats rather
complex. Raisin debuted successfully in 2013 in Germany under the name
WeltSparen, and garnered 35,000 customers with one billion euros worth of deposits
over the course of two years.
The companys model evolved over time and began its internationalisation efforts in
April with the launch of the first-ever pan-European marketplace for savings, which is
an English-language platform. Raisin also launched its French platform, raisin.fr, in
May.
A crucial next step for the platform is to provide a fully local language customer
service website and documents, says Lth. Additionally, Raisin looks to allow banks
to move deposits to the companys partner banks We do see that there are a lot of
banks out there that actually have a lot of funding that they dont need and they have
to pay money when they store it at the ECB.
Colloquially speaking, she says, We have the vision of becoming the Amazon of
savings and simple investment products in Europe, so we are looking at what other
simple, fair, low-cost savings and investment solutions that are of interest to our
clients.