Octopus Joins Forces with Challenger Banks

New fintech savings platform lets savers nearly double the average high street interest rate, while providing additional FSCS cover

Clients of financial advisers could now double their savings rate and boost their FSCS protection, thanks to Octopus Cash – the latest fintech product to be developed by Octopus Labs.

Part of the Octopus group, Octopus Labs aims to create tech-enabled financial solutions for the mainstream market – and is borne out of the same passion for the UK’s smaller businesses that guides the entire Octopus group.

The team has collaborated with a number of challenger banks to create an intelligent, tech-enabled savings account designed to give customers a better return on savings.

Banks on the platform’s roster include Cambridge & Counties and OakNorth Bank. Last year OakNorth became the first bank in the UK to move to the cloud for its core systems.

The product offers those looking to deposit £50,000 or more into a one-year fixed term account a rate of more than 1 per cent: nearly twice the ‘high street’ average of 0.55 per cent.

The launch coincides with this week’s FSCS limit increase to £85,000 per bank. But because the product will spread larger deposits across three of a growing number of challenger banks, savers can benefit from £255,000 of FSCS cover – provided they don’t already have positive account balances with any of them. They can choose to save even more if they wish, but the extra funds won’t be covered by the scheme.

Although their money may be allocated to up to three banks, savers will only need to open one single Octopus Cash account: cutting the hassle and paperwork that comes with opening and maintaining multiple bank accounts. The product’s algorithm will allocate cash to the banks as follows:

• Less than £85,000? Octopus Cash will deposit all of the cash with the challenger bank paying the best rate
• More than £85,000? Cash will be deposited in chunks of £85,000, from the highest to the lowest rate on offer
• More than £255,000? Clients can save more if they choose – but the excess won’t be covered by the FSCS

At the end of the one-year term, savers can choose to roll-over into the new best rate automatically, or withdraw. Octopus Cash is currently only available through financial advisers.

Sam Handfield-Jones of Octopus Cash said:

“The UK’s savers have £145bn squirrelled away in fixed-term deposits. However, faced with the hassle of switching, fewer than one in ten of us choose to move it at the end of the term.** But in today’s times of low interest rates and rising inflation, finding an easy way to get the best rate has never been more important. That’s why we created Octopus Cash: a simple, efficient and tech-enabled product that could let savers double their interest rate and triple their savings protection – with a third of the hassle. Saving just got a whole lot smarter.”

Rachel Curtis, Chief Customer Officer of Cambridge & Counties, added:

“Octopus Cash is a smart way for savers to get their money working harder, with minimal effort. While we like to think our own application process is quick and simple, we understand the pain for customers with larger balances of opening multiple bank accounts, and know that many never quite get round to doing it. We’re thrilled to be working with Octopus to help savers find better rates more easily, with maximum FSCS protection.”

Joel Perlman, Founder of OakNorth Bank, said:

“With inflation on the rise and interest rates stuck at all-time lows, savers need better solutions. This is a great opportunity for banks like ours to offer savings products to a broad range of savers who will undoubtedly benefit from Octopus Cash’s offering, which includes better rates than the high street, FSCS protection, and reduced hassle.”

Saving with Octopus Cash is free to clients, other than any fees they might agree to pay their adviser.