NEOBANKS: SAVINGS
Saving the day It’s nuts that ordinary folk are depositing more of their income – but earning less and less on it. It made no sense to Simon Rabin, nor to thousands of others who joined savings and investment platform Chip
2020 was a year for squirrelling away cash. With holidays, weddings, and other big-ticket occasions cancelled, UK households’ savings-to-income ratio increased to record levels – from 9.6 per cent in Q1 to 29.1 per cent in Q2, according to government figures. Not everyone had spare cash to stash. A sizeable number of lower income households, in particular, also ran through reserves at alarming rates. Meanwhile, even those whose deposits grew, often watched them being eroded by real-term negative interest rates. It's why, for those with an appetite for it, Robinhood and the merry band of similar day-trading platforms with a promise of double-digit returns, have attracted such attention from retail investors over the past year. But their gamified, fast-moving and often high-risk investment tools aren't for everyone. Many savers have more modest ambitions: they don’t want their
money idling in a bank deposit account, but neither do they want to actively engage in the markets. “They’re not asking for the world. Right? They don’t need 20 or 25 per cent returns per annum. People just want to beat inflation, they want to feel that they’re leaving their savings in a place that it’s going to grow in the medium to long term,” says Simon Rabin. Rabin is co-founder of Chip, an AI-driven, automated savings and investment platform that seeks to give ‘the little guy’ just that. In the first month of this year, it brought in around £34million of new deposits – a record for the platform – and the vast majority of those were under £20.
Rabin founded Chip three and a half years ago, using open banking-powered auto-saving features to help people put their money away easily, regularly and efficiently. Over the last couple of years, it’s built a 300,000-strong community of users, who’ve saved more than a quarter of a billion pound, more than 20,000 of whom – the Early Adopters formerly known as Chipmunks – have helped evolve the product. Many are also invested in it. Chip has smashed every Crowdcube funding target it's set – the most recent in September last year when it raised a million in minutes. “I think we are the second most equity crowdfunded company in Europe, and we have one of the largest investor communities, as well,“ says Rabin. Chip was born out of Rabin’s personal frustration at ‘being unable to save, or being really bad at identifying how much money I should put away each month, and where I should put it’.
They don’t need 20 or 25 per cent returns per annum. People just want to beat inflation
For a rainy day: The Chipmunk community has helped design products
www.fintechf.com
Issue 8 | ThePaytechMagazine
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