2023-10-03 10:49:22
October 2, 2023 Today at 06:56
Keytrade Bank has raised its rates on its savings accounts. The bank could have remunerated the saver even better if the state bond had not eaten into its deposits and reduced its margins, explains its CEO Thierry Ternier.
The interest rate war is back on the savings market. Certainly, the big banks have not yet engaged in this battle. But digital challengers are responding.
Keytrade Bank, which has around 400,000 customers, is resuming its role as a challenger in the savings market. Since the start of the year, this is already the 4th rate increase for digital banking directed by Thierry Ternier.
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Align with the competition
“At Keytrade Bank, we are simple people. We have a balance sheet balance to respect and, at the same time, we we want to convey maximum value to the customer. When there is a way to move, we move,” explains the CEO.
The boss of Keytrade Bank assures that this is not a knee-jerk reaction to MeDirect’s offer. The decision to increase rates had already been made. But while we’re at it, the bank chose to align itself with its competitor. “We operate in a competitive environment. Our goal is not to always be number one, but we want to be at the top,” says Thierry Ternier.
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Backlash
The CEO of Keytrade Bank believes that his bank could even have shown itself even more generous with its customers… if she had not suffered the repercussions of the state bond.
Since the start of 2023, successive rate increases have enabled Keytrade Bank to attract 10% more savings, explains Thierry Ternier. Then came the successful state bond campaign, which captured more than 20 billion euros, mainly from savings accounts.
“The state bond is almost a bank run organized by the state.”
Thierry Ternier
CEO of Keytrade Bank
“The success of the state bond completely wiped out the lead we had taken. We are back to square one”, notes Thierry Ternier. This drop in deposits had a effect on available margins to remunerate customers, assures the CEO. “Without the state bond, Keytrade could have increased its rates on savings 15 or even 20 additional basis points“, evokes Thierry Ternier.
Dangerous game
The CEO believes that the government played “a dangerous game” with the state bond. “I was shocked by the brutality of this operation, which had potentially a significant impact on the financial balance of certain banks. It’s almost a bank run organized by the State,” squeaks Thierry Ternier.
The CEO assures that Keytrade Bank has not suffered any harmful consequences following this operation. But he recalls: “Deposits are the raw material of banks. When they lose deposits, it’s never a good thing.”
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Thierry Ternier is also not convinced that the state bond played any role in stimulate competition on savings. “The big banks have not moved and challengers like Keytrade have raised their rates. Without the state bond, the dynamics would have been identical in every way“, assure the CEOs.
The explanation for the new rate war on savings lies essentially in the new key rate environment, continues Thierry Ternier. The ECB’s successive increases in key rates have provided banks with margins to offer better returns on savings. If the big banks have not moved, it is because of their economic modelpoints out the CEO of Keytrade Bank.
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A more liquid balance sheet
“Large banks rely heavily on mortgage loans granted at fixed rates and long terms in a period of low rates. They cannot react immediately. At Keytrade, we have a more liquid balance sheet with shorter-term investments, which allow us to be more responsive.”
With this new battle around savings, we are almost witnessing a going back more than ten years, before the period of low or even negative rates. Consumers then benefited from a rate war led by new players: 100% digital banks.
Today, Keytrade Bank is still part of this category. But it was joined by a multitude of foreign players, which we describe as neo-banks. On their side, the big banks have strengthened their digital offers, to the point of surpassing online players in their mobile offerings. In the latest ranking of banking apps, Keytrade is lagging behind while KBC and Belfius are ahead.
Train tickets or best rates
What is still unique about the Keytrade digital bank in this rapidly evolving market? “Our app and our digital approach are very good, even if there are possible areas for improvement. The big banks have invested a lot in digital, with very good results. They offer features such as purchasing train tickets or cinema tickets. It’s very good and it pushes them up in the rankings,” analyzes Thierry Ternier.
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“On our side, we want to be the best in financial products. That’s why we go to a bank. And we demonstrate it again with our new savings offer, which is significantly better than in the big banks,” concludes the CEO.
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