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New deposit platforms show limits of negative rates

Firms such as Deposit Solutions and Raisin are thriving, partly because Europe’s wealthy are so risk averse.


In June, Sweden’s Klarna, one of Europe’s biggest fintech companies, and UniCredit-owned HypoVereinsbank, both announced plans to distribute deposits through Berlin-based Raisin’s WeltSparen platform.

Previously, in April, Deutsche Bank started distributing other banks’ deposits to its wealth management and branch customers using the Deposit Solutions platform.

As open banking and the distribution of third-party deposits by banks becomes more common, what are the implications for central banks, especially as negative rates become ever more entrenched?

Unfortunately, it’s not all encouraging. Seen by some as a strength – particularly in periods of market volatility – the enduring preponderance of passively risk-averse deposit savings is part of the reason why European inflation has been so low and so hard to lift.

It’s also why European banks are so ill-placed to deal with permanently lower and even permanently negative interest rates. 

Rather than putting the money into shares, it looks like Germans are simply turning to companies that make it easier to shop around for deposits

The obsession with deposits is especially widespread in Germany, among its older generation.

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