The FinTech Times comes up with what must be, even on a Monda, winner of the dodgy metaphor of the week award. It runs an article on challenger banks, seen by the writer as the eternal “mistresses” of finance. There’s useful information here, nevertheless. We run an excerpt below, with the full article available here.
The challenger banks have always claimed they are a on a digital mission to shake up the banking industry with slick apps and new features which make managing money, and collecting rewards, far more user friendly.
However, the latest research from Curve would suggest they still have a long way to go. The service that allows customers to manage multiple bank cards through a single platform believes it is a unique position to research spending habits for those who have a choice between challenger and high street accounts.
The result may make uncomfortable reading for the challengers. When given the choice, Curve users pick their high street card over a challenger’s for more than four in every five transactions.
This finding prompted Curve to delve deeper to better understand consumer behaviour among those who have a choice of using either a high street or challenger bank. The conclusion will make unsettling reading for the new brands. Only Monzo appears to be making any major sign of inroads in competing with the high street in a year when we have already seen the closure of N26 and NatWest’s, Bo.
Curve, CEO Shachar Bialick, believes its figures prove investors backing the challenger banks may be in for an uncomfortable surprise when they look beyond the promise of disruption and focus on actual day-to-day statistics.
Historical Performance And IFISA Process Guide
That figure is the result of over £21 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.