Flagstone doubles assets under administration as UK savers chase better rates

Flagstone has more than doubled its assets under administration (AuA) in 18 months as the fintech savings platform cashes in on UK savers chasing better interest rates.

The London-based firm said its AuA has jumped 125 per cent to £13.5bn over the period from January 2023, rising more than £1bn per quarter in that time.

Flagstone added that its number of active customers has jumped 21 per cent to 725,000 since March.

The firm, which launched in 2015, provides a platform for savers to access and maintain more than 210 account offerings from 66 UK banks – adding six new partners since March. It also whitelabels services to firms including St James’s Place, Revolut and Saga.

Simon Merchant, Flagstone’s co-founder and chief executive, pinned the company’s recent growth on increasing uncertainty over interest rates and “turbulence in the wider financial markets”, driving savers to look for ways “to make their money work harder for them while mitigating risk”.

The Bank of England lowered its base rate for the first time since March 2020 earlier this month, giving some banks and building societies narrower margins on their highest-paying accounts.

“As the Bank of England base rate starts to edge downwards for the first time in over four years, it’s reasonable to expect some softening in the sorts of rates on offer,” Merchant said.

“Nevertheless, with mortgage affordability now set to rise and appetite for other forms of credit expected to increase, we’re going to see continued competition among banks to offer competitive, inflation-beating returns on savings for months to come.”

Flagstone said it recorded its sixth straight quarter of profitability at the end of June. The firm did not disclose the size of its profits.

Profits are being reinvested in “high performance operations” and expansion through more bank and brand partnerships, Flagstone said.

Flagstone raised £108m from US private equity firm Estancia Capital Partners in March, landing it one of the biggest UK fintech funding rounds this year and taking the total raised by the company to roughly £150m.

Merchant told City A.M. in March that Flagstone was weighing up international expansion, citing a “huge addressable market opportunity” as cash continues being an “ignored asset class that suffers from inertia”.

While the UK’s savings market is worth an estimated £1.7 trillion, £1.1 trillion is held in accounts earning two per cent or less per year, according to analysis of Bank of England data in January.