Aviva Save launches - what does it offer for savers?
There are currently 156 banks authorised in the UK to accept deposits, and a further 43 building societies. Combined, they look after approximately £1.7tn of cash savings on behalf of UK savers.
This number is set to increase too, with firms like Alba, Ashman Finance, B-North and GBB awaiting the outcome of their licence applications.
Given the number of providers, it’s no surprise that the savings market has seen an influx of ‘marketplaces’ and cash platforms. They are all looking to help savers navigate their way to the best deals and provide them with a single login rather than having to register with each bank.
Flagstone, Hargreaves Lansdown Active Savings, Raisin, Akoni and Insignis all operate in the space already. However, with combined balances understood to be less than £10bn, the marketplaces only account for around 0.5% of the savings market.
Given this, the launch by FTSE 100 giant Aviva, of Aviva Save into this space was of much interest. They’d been rumours for several years that Aviva was looking at launching its own bank, and I understood it had gone as far as assembling a project team to formally evaluate this.
Entering the cash savings market makes sense for Aviva. It offers great cross selling opportunities for its insurance businesses and its savings and investments arm. With the cost of acquisition of an investment client costing firms around £400 - £500, a warm source of prospects certainly has attractions. That’s ignoring the fact that it ‘receives payments from the partner banks based on the amount of money deposited through Aviva Save’.
Eagerly anticipating what a company of Aviva’s resources could offer, I registered for Aviva Save. The process was very easy and straight forward and as good as my experiences of using Aviva’s other online services. There was a slight delay in being approved – 23 minutes from confirming my email registration to having my account open. In practice, this just meant that I could only browse the ‘marketplace’, rather than actually deposit any savings.
‘Marketplace’ is certainly a stretch – and fair play to whoever was brave enough to call it that - because, with just three providers, it’s a bold claim! Just Aldermore, OakNorth and Paragon are offering a total of only 15 savings accounts on Aviva Save, all of which are fixed term products.
Aldermore are not currently offering any fixed rate products direct, so making a comparison isn’t possible. Paragon have a 1 and 2 Year rate on offer, which are the same as they offer direct to savers, so Paragon are clearly swallowing the costs of being on there. OakNorth though are offering products at 0.25% below those offered on their website with a 1 Year paying 0.32% versus 0.57% direct. This suggests that Aviva Save is taking a pretty significant cut.
Paragon’s two year rate of 0.65% is the best on offer on Aviva Save, yet it doesn’t feature in our top 10 best buys on Savings Guru. The next best, 0.64% for five years from Aldermore is miles off our best buy of 1.50% (Gatehouse Bank) and almost half that available from Shawbrook and UBL, who both pay 1.25%.
Overall, it’s a deeply underwhelming launch from Aviva in a space that, in my opinion, is crying out for a strong brand and dominant player. It needs to offer a far wider selection of products, including easy access which is 50% of the savings market, and providers. If Aviva Save’s fee is the reason for the strong disparity between OakNorth’s direct rates and platform ones, it needs to look at that too. Until then, there’s little there to recommend for savers.