An online shopping approach to maximising deposit returns

Mr Thatcher: “You choose the product you want, pop it into a basket, input the amount you want to put in and start earning interest on it”

Flagstone International has set out to simplify the process of finding the most competitive products for your savings. Founder Andrew Thatcher tells Emily Moore how it works

IN a world in which online shopping is very much the norm for many people, the concept of browsing a marketplace, popping an item into a basket and then checking out to complete the transaction – often with just one click – is nothing new.

But while this may be standard practice when it comes to ordering clothes, home accessories and even some groceries, taking such an approach to choosing where to deposit one’s money may be less familiar.

Indeed, as the co-founder and chief executive of Flagstone International explains, shopping around for a bank account – whether that is done online or in person – is not something which many people do very often.

And this, says Andrew Thatcher, means that a lot of people are not earning anywhere near as much money as they could.

“The problem which we are trying to solve is a very simple one, and one which is universally recognised,” he said. “That problem is that the vast majority of depositors suffer a sub-optimal return on their cash, largely because of inertia. That, I suspect, is driven by the fact that ‘open a new bank account’ is not written on many to-do lists and also that opening a new account traditionally requires a big investment of time to find out where the best interest rates are and then resources to provide all the documentation needed to satisfy that deposit taker.”

Inspired by this situation, in 2013, Andrew founded Flagstone in the UK, launching the international branch, which is based in Jersey, at the beginning of last year.

“Flagstone is an out-and-out fintech business,” he explained. “We own and operate a web-based app which sits between the two sides of the market. On the one side, we have the depositors and, on the other, the banks – the licensed deposit-taking institutions. This platform gives clients the opportunity to carry out one onboarding journey with Flagstone, open an account with us and see the deposit products from all the banks with whom we have contracts.

“Clients can then, through a single instruction made on the platform, move their money from one bank to another to suit their requirements and gain access to the leading market rates, which vary depending on what banks are doing with the money they have borrowed from you, how much they want that money and how much they are willing to pay for it.”

Effectively, says Andrew, the Flagstone platform has “turned choosing a deposit account into a similar process to shopping for anything else on the market”.

“You choose the product you want, pop it into a basket, input the amount you want to put in and start earning interest on it,” he said. “Because you have already gone through the onboarding process with Flagstone, the banks don’t ask for any additional information from you, and all their details are available at a glance, so we have removed all the traditional drivers of inertia.”

Andrew Thatcher, founder of Flagstone International Pictures: JON GUEGAN

Since launching the UK business a decade ago, Andrew says that the company has grown significantly, now employing around 270 people and holding nearly £12bn of assets under administration.

“That asset figure is growing by about £1bn per quarter, driven by rising interest rates,” he said, adding that – unlike the international offer – the UK platform is available to retail customers with “relatively low” sums to deposit.

“The international business is slightly different, with our move here precipitated by a large trust administration company approaching us and talking about the difficulties it had managing the cash within the structures it administers,” Andrew added.

“That was really where the idea for Flagstone International was born and we chose to base it in Jersey because, as a jurisdiction, the Island has a reputation for low levels of financial crime and high regulatory standards.”

The business model, he explains, relies on making the platform available to wealth managers, trust and administration businesses, captive insurance managers and others who then use it to support their clients.

“On the one hand, we are working with these distribution partners, such as TMF, Ocorian and Evelyn Partners International, and, on the other hand, we are working with a range of banks to increase the range of products available on the platform.”

This combined approach, he said, was designed to make the business “the de-facto deposit solution for customers seeking a more efficient way to manage their cash for better returns”.

“This also helps clients to reduce their risk through diversification,” he said. “A trustee, for example, has a fiduciary responsibility to think about risk as well as return, and it can be difficult if you have to open eight different accounts to achieve that diversification. Here, you can open one account for the trust and deposit the money across eight banks to reduce the risk through that diversification.”

The platform also offers foreign-exchange transactions and Andrew said that the company was seeking regulatory approval to enable it to offer money market, and other cash and liquidity, funds to the site.

While the international division is currently focused predominantly on attracting corporate and trust entities, Andrew, whose background is in banking and asset management, predicts significant growth over the next few years.

“We have a team of 17 people focused on the international market and the initial focus is on growing the number of banks and distribution partners working with us,” he said. “The goal is to get to ten banks by the end of this year, going up to 20 or 30 over a three-year period. That would follow the pattern of the UK business.

“As we build more operational efficiency into the platform, we will also reduce the minimum deposit required, as we have done in the UK. Ultimately, the aim of the business is to enable customers, wherever they are in the world, to come onto the platform, see multi-currency deposit options from 25 to 30 banks across the world, and to be able to carry out foreign exchange transactions at advantageous prices, to access money market funds in multiple currencies and across multiple jurisdictions and to be able to manage all their cash and liquidity in one place.”

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