Bitpanda hits back at low interest rates with latest product

Austrian crypto unicorn Bitpanda has launched a new high-interest product that will allow users to earn up to 4.1% in returns on cash deposited into money market funds.

The new product, called Bitpanda Cash Plus, is designed to redress consumer frustration about low-interest bank accounts. Customers can expect returns starting at 2.5% for euros, rising to 3.5% for pounds sterling and 4.1% for US dollars. It will be fully flexible, with users able to invest and withdraw their money at any time.

Users’ money will be invested into money market funds, which are used by banks and large companies to balance relatively low risk with decent returns. However, this type of investment product is usually reserved for those with deep pockets, as money market funds often come with high deposit requirements. This is something that Bitpanda is aiming to change, making interest-paying accounts available to everybody.

For the best part of a decade, many current accounts in Europe have had interest rates lower than 1%, and even as low as zero. Unlike Bitpanda’s latest proposition, those products with the highest interests often come with strings attached – like limited access to your money.

Bitpanda on road to democratising investment

The yields associated with Bitpanda Cash Plus will track central bank interest rates, hence they are subject to change and different from one currency to the next. There is no lock-in period or minimum deposit, and Bitpanda VIP members will get access to preferential rates of return.

Eric Demuth, CEO of Bitpanda, says: “We have been frustrated by the low interest offerings in Europe for several months. With central bank rates rising and barely any of that increase being passed on to investors, we decided to find a way to make money market funds available to everyone. We believe we have built the best product available on the market, because it combines market leading returns with low volatility, 24/7 availability, no minimum deposit, no lock-ins, and no hidden fees. Ultimately we’ve built a product that we want to use ourselves and which is superior to all offerings out there.”

With many European consumers coming under financial pressure, many people are trying to get the most out of their money right now. Bitpanda’s latest product launch is consistent with recent manoeuvres the Vienna-based firm has been making: in January, Bitpanda launched an investment-as-a-service offering which would allow banks and fintech platforms to easily integrate trading services into their apps.

Then, in May, it announced plans to invest US$10mn in AI-driven investment features.

What percentage of Europeans invest their money?

It is part of a broader trend within the fintech sector of making wealth tools more accessible and democratising access to financial products previously reserved for the super-wealthy. Last year, US startup Arta received backing from investors for its fintech platform, which replicates another exclusive financial instrument, the so-called ‘family office’, which is usually the preserve of rich households.

According to the European Union (EU), the EU-wide household investment rate, determined as a proportion of EU households’ total wealth, was 9.2% in 2021. This has picked up in recent years, matching the levels seen a decade ago, following several years of stagnation. Cyprus registered the eurozone’s highest level of investment at 13.3%, while nearby Greece recorded the lowest with just 3.4%.