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Challenger banks are edging ahead of the high street on savings

The competition is heating up as fintech is starting to take centre stage in customer appeal.

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Challenger banks like OakNorth, Masthaven, Aldermore and Axis Bank are coming out ahead of the game by offering savings rates more than 1 per cent higher than the average offered by high street incumbents.

New research conducted by fellow challenger Gatehouse Bank revealed today that the average one year fixed-term deposit account offered by UK challengers pays 1.82 per cent on average in interest returns, compared to 0.63 per cent by high street competitors.

Likewise, the average 2 year fixed-term deposit account at a challenger bank pays 1.29 per cent more than the high street, coming in at 2.05 per cent on average compared to only 0.76 per cent from incumbents.

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“If proof were needed that, even in a low interest rate environment, it’s worth shopping around, then it’s the dramatic difference in the rates paid to the nation’s savers by challengers compared with larger banks,” said Charles Haresnape, CEO of Gatehouse Bank.

“Sadly too many savers still opt for products from household names as they are unaware of the best buys that exist beyond the high street. What they also often overlook is the fact that deposits in UK challenger banks are protected by the FSCS in exactly the same way as with a high street bank.”

The news comes as research recently conducted by ING-owned personal finance app Yolt showed that consumer awareness of Open Banking still has a way to go, with 39 per cent of the public having absolutely no idea what the new regulations are or what it could mean for them. A further 30 per cent knew that it had something to do with banking online, or via a smartphone, but couldn’t be more specific than that.

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