Frankfurt The fight for the deposits of savers is becoming more acute. After Trade Republic, the neo-broker Scalable Capital is now also trying to attract new customers with high interest rates.
From February, the Munich-based company will pay 2.3 percent interest on customer deposits, Scalable announced on Thursday. The offer is valid “until further notice” for new customers and existing customers with a credit of up to 100,000 euros. Interest would be paid quarterly.
However, the whole thing is not free of charge. The offer is only valid for subscribers to the “Prime plus” offer, which costs EUR 4.99 per month. The offer, which was previously known under the name “Prime flex”, also includes a trading flat rate.
“With the new offer, we primarily want to win customers who are also interested in brokerage,” said co-boss Erik Podzuweit to the Handelsblatt. “That’s why we opted for the subscription model.”
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At the beginning of January, Trade Republic announced that it would pay two percent interest on call money up to a balance of 50,000 euros – and thus caused a stir in the financial sector. In contrast to Scalable, there are no subscription costs with Trade Republic.
>> Read here: That’s behind Trade Republic’s interest rate offensive
The background to the new offers is the turnaround in interest rates. The European Central Bank (ECB) has raised interest rates on deposits several times in recent months. She currently pays two percent interest when banks park money with her overnight.
“Initially, we will have to pay extra for our interest rate offer,” says Podzuweit. “However, we expect that interest rates will continue to rise.” Experts assume that the ECB will raise the deposit rate to 3.25 percent by the end of the year.
Private investors traded significantly less in 2022
Scalable Capital originally started out as a digital asset manager in 2014. Since 2020, customers have also been able to trade stocks, ETFs, funds, cryptocurrencies and derivatives. According to the company, it now has more than 600,000 customers.
However, the company does not have its own banking license. The accounts and custody accounts of their customers are managed in Germany by Baader Bank. “Our goal in the short term is not to become a neobank,” stresses Podzuweit. “That’s why we’re not aiming for a full banking license at first.”
Instead, Scalable wanted to become an investment platform where customers go to invest their money. “The past year went very well in terms of customer acquisition,” said Podzuweit. “However, trading activity has fallen by an average of 50 percent.”
This year, however, the trend has been positive so far: “In January we were able to significantly improve our numbers compared to December.”
Trade Republic had also reported falling volumes in stock trading last year. Experts therefore also see the neo-brokers’ interest rate offensive as a sign that they are becoming less dependent on market developments and want to open up additional sources of income.
Many banks are holding back on interest payments
The neo-brokers’ offensive is also increasing the pressure on traditional banks to also pay their customers interest on call money. So far, the vast majority of financial institutions have been reluctant to do so.
Almost two-thirds of German credit institutions have so far not paid any interest on call money, as an evaluation by the comparison portal Verifox showed last week. In the case of savings banks, the share is almost three quarters.
According to Verifox, the average interest rate for overnight deposits of EUR 10,000 at savings banks is currently 0.05 percent. At the cooperative banks it is 0.06 percent. Banks with nationwide offers, on the other hand, have raised interest rates in some cases and are paying an average of 0.54 percent.
Many institutes have resolved to remain disciplined when offering interest rates to their customers – and want to maintain this line despite the neo-brokers’ offensive. “You can’t go along with every nonsense,” says the manager of a major German bank.
More: Interest on overnight money? None at most savings banks