Deposit Solutions’ study shows European current account balances reaching €4 mn for the first time
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Analysis by the FinTech unicorn Deposit Solutions has revealed that Europeans hold more money in their current accounts as compared to before, with the current account volume in the Eurozone reaching a record high in April 2020, doubling since 2013. The analysis stated that 50% of the money on Eurozone bank accounts is in non-interest-bearing current accounts instead of an interest-bearing overnight deposit, fixed-term deposit, and savings accounts.
“A large part of the Europeans’ savings remain without interest in current accounts instead of being invested in overnight or fixed-term deposit accounts to earn interest. As a result, savers miss out on income year after year – even in times of low-interest rates,” said Dr. Tim Sievers, CEO and Founder of Deposit Solutions. “Customers whose bank allows them to use higher-interest overnight and fixed-term deposit products from other providers easily via their existing account have a clear advantage.”
According to the company’s analysis, the Dutch and French savers hold considerably less money on current accounts at 17% and 33%, respectively, and that the share of money deposited on current accounts is highest in Italy and Spain at 67% and 80% respectively.
Deposit Solutions stated that the European economies of Germany, Italy, and the UK has seen a tendency to keep money flexibly in current or overnight money accounts. Only about one-third of their money is tied to maturities or notice periods as in fixed-term or savings accounts. The French, on the other hand, invest two-thirds of their money in fixed-term deposits and keep only one-third in current or call money accounts.
“For banks from countries where people do not rely so much on savings deposits accounts, deposit funding is more expensive than it would have to be. In order to solve this challenge, we are continuing to drive forward the development of a European deposit market – enabling banks to collect customer deposits across national borders and savers to take advantage of interest rate offers throughout Europe via their primary bank at home. As a new infrastructure for an open deposit market, our platform already connects more than 150 banks from 20 European countries”, said Tim Sievers.
The Deposit Solutions’ analysis has been developed on the basis of data from the Deutsche Bundesbank, European Central Bank, Eurostat, Barkow Consulting, the Federal Statistical Office, and the Institute for SME Research.
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