The Lemon Fool

Hi

Anyone [else] using Chip?

It's a phone app that reads from your bank account and then uses an algorithm to determine how much you could save each week 'without noticing'. It's backed by Barclays. You can also push money to it and take money out. You get a text saying how much it is taking but you can cancel it if you don't want it to be taken. I think you can save up to £100pw.

I've had it a few weeks and quite like it. Interests rates are up to 5%, based on how many referrals you make. So you could use it as a £400pm 5% regular saving account if you were organised (and had five friends!).

Mel

Nope, new to me. Do you (does one) have to be a Barclays customer?

It's a phone app that reads from your bank account
That bit worried me, but i'm sure it's totally secure

AleisterCrowley wrote:Nope, new to me. Do you (does one) have to be a Barclays customer?

It's a phone app that reads from your bank account
That bit worried me, but i'm sure it's totally secure

No, you don't have to be a Barclays customer.

It only has read access to the bank account - this is all thanks to open banking.

Mel

Open Banking is something I haven't investigated.

How good is its security?

And how well does it insure your data?


Slarti

Slarti wrote:How good is its security?

And how well does it insure your data?


Slarti

As good as any Barclays account - but, do feel free to do your own research. Personally, I'm not paranoid.

Mel

melonfool wrote:

Slarti wrote:How good is its security?

And how well does it insure your data?


Slarti

As good as any Barclays account - but, do feel free to do your own research. Personally, I'm not paranoid.

Mel

Except that it is not Barclays

From Companies House https://beta.companieshouse.gov.uk/comp ... nt-control


I don't think I'll be an early adopter of this tech.

Slarti

Bit more info here - the write up isn't as negative as the headline suggests!
https://www.independent.co.uk/Business/ ... 68871.html

Slarti wrote:

melonfool wrote:

Slarti wrote:How good is its security?

And how well does it insure your data?


Slarti

As good as any Barclays account - but, do feel free to do your own research. Personally, I'm not paranoid.

Mel

Except that it is not Barclays

From Companies House https://beta.companieshouse.gov.uk/comp ... nt-control


I don't think I'll be an early adopter of this tech.

Slarti

As I said, it's backed by Barclays.

Mel

AleisterCrowley wrote:Bit more info here - the write up isn't as negative as the headline suggests!
https://www.independent.co.uk/Business/ ... 68871.html

I had to grit my teeth whilst reading that! The app's creators describe their target market's (millennials) lifestyles as more reactive than our parents which sounded OK (as in, no idea what that meant), but then the first example was I decide what I want for dinner when I walk past Tesco Express, rather than doing a weekly shop to a budget. So, ignoring the food waste, the extra cost of convenience store shopping and the limited diet issues, the target market can't save because they have no plan. I don't think an app is going to change the fundamental problem here.

The logic of the app, according to the article, is based on an algorithm that notices when you are under-spending versus your average. I like that, and for those who monitor their accounts and adjust their spending accordingly I think it's a fantastic savings feedback loop, but that doesn't sound like the target market?

The interview with a customer (Batt) seems to confirm my Millenials stereotype:
"Sometimes it feels futile to save towards things or set goals", and then "money is worth less because of inflation"

No planned budget, no willingness to sacrifice immediate gratification for a better tomorrow and no experience of "normal" inflation. It feels like another generation has been raised to be financially fleeced.

I'm assuming the article was written for its intended readership, but it had the effect of alienating me from the app overall. What was interesting was where the app designers were planning to develop (into overdrafts) which made me think this is an area that banks are going to be really keen to take control of. It won't surprise me to see all the banks starting to push their own versions of this or something similar, or at the very least be the back-office in the process.

VRD

melonfool wrote:
As I said, it's backed by Barclays.

Mel

Mel, in what sense is it backed by Barclays? Do you mean it can be used i.e. is compatible with a Barclays account! Backing in a financial context has quite a specific meaning, and I see no evidence on the website or in filings of financial, technical or management backing.


Also, anyone know why this startup is valued at c£300,000 by its angel investors? Presumably based solely on the success of previous ventures? How are they going to make their money?How are users' "savings" invested and protected?


GS

GoSeigen wrote:anyone know why this startup is valued at c£300,000 by its angel investors? Presumably based solely on the success of previous ventures? How are they going to make their money?How are users' "savings" invested and protected?

GS

I'd imagine the valuation serves several purposes:
# Further funding needs a valuation at which the current investors will accept dilution.
# The app creators talk about moving into overdrafts (and making money from associated fees)

The Chip savings account is hosted by Barclays*, but, from the app website**:

A Chip savings account is provided by Prepaid Financial Services (PFS), and Chip is an authorised agent of PFS
<snip>
We’re working on getting covered by the Financial Services Compensation Scheme, which pays out if the bank goes bust.

VRD


* https://getchip.uk/faq
**https://getchip.uk/blog/safer-saving/

Money saving Expert says:

"It stores your money in an 'e-wallet' and DOESN'T have the usual £85,000 per person protection via the FSCS but the real risk is if Barclays went bust, which is where your money is held (see FAQs for more)."

https://www.moneysavingexpert.com/banki ... nking#chip

Mel

melonfool wrote:Money saving Expert says:

"It stores your money in an 'e-wallet' and DOESN'T have the usual £85,000 per person protection via the FSCS but the real risk is if Barclays went bust, which is where your money is held (see FAQs for more)."

https://www.moneysavingexpert.com/banki ... nking#chip

Mel

It's not clear to me what Barclays would be doing with the money if CHIP/PFS went bust - the account is stated to be in your name at Barclays - but it's not clear how you would access it if CHIP failed.

The idea seems good - although I don't think I'm the target market. Perhaps a few wrinkles to iron out first? I'm all for being an early adopter of some things - but I might wait a little longer for this...

chas49 wrote:
The idea seems good - although I don't think I'm the target market. Perhaps a few wrinkles to iron out first? I'm all for being an early adopter of some things - but I might wait a little longer for this...

I'm not the target market either, being a good saver anyway.

My point was, you can manipulate it to save £100pw on 5% interest - I can't see that level of interest for that level of saving anywhere else.

Mel

looks like £600 per month max, based on a quick scan of details (I'm 'working' so not enough time to delve into T&Cs)
I've got a CLUB LLOYDS MONTHLY SAVER a/c which pays 3% , limited to £400pm. They also mess around with these account and terminate after one year so no chance to build up a pot.