Top Fintech Updates: Apple, Revolut, Algbra, and Wise’s Rising Rates

Welcome to this month’s recap, where we have plenty of exciting news to cover. Apple has announced a high-yield savings account that’s paying 10 times the average. We also have updates from Revolut, Chip, and Wise. Plus, I’ll share a new UK provider with a compelling cashback offer and some of the best savings rates available right now. So, let’s dive in!

Apple’s High-Yield Savings Account: A Game Changer?

The Apple Savings Account

Apple has now introduced a savings account with a very competitive rate of 4.15%. Anyone with an Apple Card can earn that amount of interest on both cashback and deposits made from a linked bank account. The savings account is from Goldman Sachs, and there’s no fees, no minimum balance, and you can earn interest on deposits up to $250,000.

Impact on Banking

So, what does this mean for banking, and will Apple do the unthinkable and launch their own bank? Also, why is a company that makes most of its money selling devices even getting into banking? To answer these questions, we have to consider just how much potential Apple has to disrupt this industry.

Apple’s reach goes well beyond that of any bank, even behemoth legacy banks like HSBC and Bank of America. We touch our smartphones around 2,500 times a day, but we’re not opening our banking apps or visiting physical bank branches nearly as often. This presents an opportunity for Apple, especially considering that most Apple users have greater trust in the company compared to traditional banks.

The launch of this high-yield savings account comes at a time when banks announce a loss of $60 billion in deposits. Apple, on the other hand, is cash-rich and won’t have the same problems as a typical bank. With around $60 billion in cash and $100 billion in marketable securities, Apple could easily handle a run on deposits without breaking a sweat.

So, would you open an account with Apple Bank? It’s hard to say no to an Apple Card with 2% cashback and a high-yield savings account, similar to what JP Morgan Chase offers. Only time will tell if Apple decides to expand further into the world of banking.

Revolut Updates: Joint Accounts, Fee Increases, and Valuation Changes

Joint Accounts Launch

April was a busy month for Revolut(Link), as they launched joint accounts in the European Economic Area (EEA). Unfortunately, this does not include the UK. Users living in the same country can now open a joint account, although it seems to function more like sharing a Revolut account without unlocking any different or unique features.

Fee Increases

Revolut has also increased some of their fees. Starting from next month, the minimum fee for crypto trading goes up from 99p to £1.49, meaning you’ll be charged either 0.99% for a trade or £1.49, depending on which is highest. Additionally, standard customers will experience an increase in currency exchange fees from 0.5% to 1% starting June 7th, and there will be an increase in commodity trading fees as well.

Valuation Slashed

At the same time, Revolut’s valuation was slashed by $15 billion, making it no longer worth more than NatWest. However, Revolut is still valued at $18 billion, which is impressive in today’s economic climate. The devaluation came as Schroder’s, a company with a stake in Revolut, cut their valuation of that stake by 50%—though they also did this to ATOM Bank. Revolut responded by stating they do not engage in speculation on their valuation and continue to perform strongly in all markets, even reporting profitability for the first time.

Algbra Cashback Offer: A New Contender for Ethical Banking?

Algbra’s Cashback Offers

Chase UK has been successful in attracting customers by offering 1% cashback, and now a new provider called Algbra (possibly a play on the word “algebra”) is attempting a similar strategy. Algbra is built on ethical principles, aiming to put people and the planet first. They are not yet a licensed bank, so there’s no FSCS protection.

Algbra offers 1.5% cashback on all purchases made with Google or Apple Pay and 1% on everyday spending using their card. According to their terms and conditions, cashback earned with everyday spending is limited to only £10 per month. We can assume the 1.5% cashback has a similar limit.

Ethical Banking Alternative

Although Algbra’s cashback offer is not as good as Chase UK’s original unlimited 1% cashback, Chase’s offer is coming to an end and being capped at £15 per month. For those concerned about ethical banking and the environment, Algbra may be a more appealing choice despite the slightly lower cashback limit.

Algbra also features a carbon tracking tool that measures your carbon impact. This unique account offering will be reviewed in more detail next month, so stay tuned!

Wise Updates: Rising Interest Rates and US Customers

Wise Interest Rate Increases

Last month, Wise(Link) offered an interest-earning account with a rate of 3.66%, which has now increased to 3.81%. This rate may continue to rise, as it is pegged to the Bank of England’s base rate. With a bank meeting next month and inflation remaining high, interest rates may rise again, possibly pushing Wise’s rate past 4%.

While not the highest rate available, the Wise account is an easy-access option without a minimum term or penalty for withdrawing. Users can access up to 97% of their money at any time, although there are some small fees associated with the account.

Wise’s US Customers Can Earn 3.92% on USD Balances

Wise recently announced that US customers can now earn 3.92% on their USD balances. Like the British pound Wise account, there is no fee for withdrawing money early and no deposit required. It’s easy access, allowing users to deposit money, earn 3.92% interest, and access up to 97% of their balance at any time.

Lagging Interest Rates: Traditional Banks vs. Digital Banks

It is concerning that most banks are not passing on higher savings rates to their customers. The Telegraph reported on this issue, pointing out banks like Barclays, Lloyds, NatWest, and HSBC with disappointingly low rates. In contrast, digital banks like Wise, Monzo, and Chip are offering better rates to their customers.

Virgin’s Everyday Saver account, with a 0.25% interest rate, is a prime example of lagging rates in traditional banks.