22nd May 2024

Supporting savers: enhancing ClearBank Embedded Banking with flexible Cash ISAs

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25 years ago, a new financial product launched that offered UK consumers a new way to set aside money in an efficient way, the Individual Savings Account, or ISA for short.

It offered two options, a Cash ISA, like a regular savings account, and a Stocks and Shares ISA where money is invested into a range of assets including shares or bonds. The advantage of ISAs is that holders can save or invest up to the current allowance of £20,000 per tax year and are exempt from any income or capital gains tax on their returns. Some consumers have seen significant returns and as of April 2021, it’s estimated that more than four thousand ISA holders are now millionaires.

According to research by Finder, 26% of UK consumers plan to open at least one ISA in 2024/25 tax year, with 20% of those existing ISA holders intending to open another account. There are now hundreds of ISA options for consumers to choose from and educational sites such as MoneySuperMarket and Money Saving Expert who provide information and comparisons on the best deals available.

New rules create new opportunities

While ISAs quickly gained traction and became central to consumers’ savings plans, 25 years on from their inception, new rules came into force this tax year to further increase the competition for deposits.

For the first time, rules will allow consumers to open multiple ISAs of the same type across multiple providers in the same tax year.

Some consumers will look to have multiple ISA providers to avoid going above the FSCS protection threshold of £85,000, for example if they have an ISA and current account with the same provider. For others, it offers an opportunity to shop around for the best deals that meet their savings needs.

To stand out in a crowded market, providers will need to combine great customer experience, from account opening and seamless deposits, along with competitive rates. One way that financial institutions can achieve this is by working with a banking partner that can deliver the infrastructure that powers ISA propositions.

The ClearBank Embedded Banking flexible Cash ISA

ClearBank has, from its inception, been focused on providing the infrastructure that enables firms to innovate, differentiate and grow. A core element of that vision is our Embedded Banking proposition that offers firms the ability to launch high quality services leveraging our banking licence and infrastructure. We collaborate with innovative financial institutions to bring their vision to life, saving them the time and cost of becoming a bank.

We saw that the savings market was being dominated by uninspiring offerings that failed to meet savers’ primary needs. Now it’s highly competitive with new fintech firms delivering intuitive app-based services that make saving through ISAs much more flexible.

That’s why we decided to evolve our Embedded Banking offering to include flexible Cash ISAs. We’re creating an efficient way for clients to deliver more savings options to their clients and attract more deposits.

In just four months, we extended our platform, to meet the specific needs of the flexible Cash ISA product. We were guided by the same philosophy of our regular savings account product, passing a large portion of the interest earned to the client for them to pass on to customers.

Our flexible Cash ISA enables end consumers to deposit and withdraw funds from their Cash ISA and hold a maximum of £20,000 in a given tax year as set by HMRC. Some key benefits for our clients include:

  • Eligible deposits up to £85,000 are protected by the Financial Services Compensation Scheme (FSCS)* for each retail customer, across all accounts held at ClearBank.
  • Peace of mind with all GBP funds held on behalf of customers at the Bank of England.
  • The flexibility to set and update interest rates for a standard variable rate offer, tracking at a fixed margin below the Bank of England base rate, dependent on the balance. If the Bank of England base rate changes, the interest rate offered changes as well.
  • The ability for customers to withdraw money from their ISA and pay back in later (in the same tax year), without it counting against the annual £20,000 ISA allowance.
  • Interest accruals calculated daily and paid monthly by ClearBank.
  • Interest webhooks so that you always have a record of all interest paid.
  • ClearBank submits the annual returns of information and returns of statistical information and manages all FSCS reporting.

Chip launched its flexible Cash ISA, powered by Embedded Banking with ClearBank.

“This is a big moment for Chip and is the next step in our mission to become a trusted, one-stop destination for building wealth. Rising interest rates have changed the landscape so our priority was to develop a product to give our users a tax-efficient way to get the most out of their money, with all of the convenience that they’ve come to expect from us"

*The Financial Services Compensation Scheme (FSCS) is an independent body set up by Parliament under the Financial Services and Markets Act 2000 (FSMA). Should a bank, building society or credit union fail, the FSCS protects eligible deposits up to the deposit protection limit, currently £85,000 for bank deposits.

Joel Bland is Product Manager – Cash ISAs at ClearBank.

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