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JPMorgan’s digital bank Chase has launched a new UK savings account with a 1.5 per cent rate, outpacing high street competitors offering better deals for customers following rate rises from the Bank of England.
UK savers are under pressure as inflation hit a 30-year high of 6.2 per cent last month, with a further rise set for April when regulated energy prices are set to jump and as war in Ukraine raises concerns over the cost of fuel and other commodities.
“With the cost of living increasing, we know that consumers want to maximise the interest they can earn with the reassurance of being able to access their savings instantly,” said Shaun Port, Chase’s UK managing director for savings and investments.
Chase’s new easy access account, which is linked to a current account from the digital bank, will allow savers to deposit up to £250,000 in total which can be accessed at any time. Customers can open up to 10 separate saver accounts.
“This is clearly a carrot from the digital bank to try and drive new current account openings and in the current market l expect it will be swamped with applications,” said Andrew Hagger, a personal finance writer at Moneycomms.co.uk.
Other lenders are set to raise the rates on their savings accounts next month, though not to the same rate. The rate on Lloyds Bank’s and NatWest’s instant saver accounts will rise from 0.01 per cent to 0.1 per cent, although other products saw larger increases.
While Chase does not have a minimum income requirement for a current account it requires smartphone access and does not currently offer joint accounts, said Hagger, potentially limiting some customers.
“Let’s just hope that the rate is more than a short term incentive that then gets cut just a few months down the line,” he said.
JPMorgan launched Chase in the UK retail market last year, its first overseas retail bank in the company’s 222-year history, in a move compared to Goldman Sachs’ decision to launch consumer bank Marcus in 2018. At launch, Chase initially offered only current accounts with a rewards programme.
The UK retail market has been an attractive test bed for US banks seeking to expand digital offerings, with its strong fintech scene and well-established payments infrastructure. Open Banking standards, which are meant to give customers more control over their data, in theory allow them to switch banks more easily.
This month, the FT reported that the decision to launch Chase in competition with digital players such as Revolut, Monzo, Starling and an array of high-street brands has drawn questions, at a time when rivals such as Citigroup are shrinking their international operations.
Big banks’ efforts to launch digital brands have had mixed success. JPMorgan’s first effort, US bank Finn, closed after a year. NatWest’s homegrown digital bank Bó was shuttered in 2020, lasting less than six months.
Soaring inflation is now expected to hit 8 per cent by the end of June, fuelling fears of the impact on the cost of living. Earlier this month, the Bank of England raised its main interest rate from 0.5 per cent to 0.75 per cent.
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