Wise launches UK current account paying 3.26% interest, challenging high-street banks

Wise, the London-based international payments firm, is escalating its battle for UK banking customers by launching a full current account. The service offers a 3.26% annual interest rate on balances, significantly higher than most traditional banks. This move, backed by a physical London branch, targets the £8bn held by its existing 3 million UK users, aiming to become their primary account. Wise chief Nilan Peiris argues traditional banks lag in customer experience, stating, 'Banks haven’t kept pace with what customers expect for their current account.'

Klarna and PayPal are also pivoting into traditional banking, with Klarna launching a UK debit card in October and PayPal offering credit/debit cards. Revolut, now a full UK bank, plans consumer credit services. Boston Consulting’s Kunal Jhanji notes fintechs leverage faster onboarding, slicker apps, and better FX pricing to steal share, betting diversification will boost profitability. 'They are winning by meeting expectations for simplicity, speed, and value,' he said.

However, fintechs’ track record is mixed. While Revolut and Monzo attracted millions, neither became the primary account for wage payments, limiting deposit bases crucial for lending. Traditional banks counter by investing billions in tech upgrades, protecting their market share.