BlackRock backs British 'challenger bank for savings' Chip

Chip's investment app. Photo: Chip
Chip's app. Photo: Chip

BlackRock (BLK) is working with a British fintech app targeting savers.

Chip said on Thursday it would now offer a suite of BlackRock-managed funds to its customers through the Chip app.

Money invested in the funds will be put into a mixture of stocks and bonds. The highest risk of the three funds has in the past returned up to 8% for investors.

It represents a coup for Chip, which was founded in 2016 as an automatic savings app. BlackRock is the biggest investment manager in the world, with over $8tn (£5.6tn) of assets under management.

“What we say in some of our marketing material is: ask your dad, he will have heard of them," founder and chief executive Simon Rabin said of BlackRock. "It’s a joke but it gets the point across. By [working with] with BlackRock, that should give our customers a decent amount of comfort.

Rabin set up Chip in 2016 as an automatic savings app but has since evolved the company into a “challenger bank for savings”.

“That is all about, yes, giving customers tools to help them save but also giving them seamless access to the best returns," he told Yahoo Finance UK. "That can be instant cash deposits but also passive investments."

Chip currently has 355,000 customers in the UK who have over half a billion deposited through the app. The average savers is a mid-30s city dweller on above average income.

“For BlackRock, it’s really exciting for them to get access to a whole new demographic of customer," Rabin said.

BlackRock has no investment in Chip.

Chip founder and CEO Simon Rabin. Photo: Chip
Chip founder and CEO Simon Rabin. Photo: Chip

Despite Chip's urban millennial demographic, Rabin said his company was aiming to appeal to a broader market.

“We’re a savings account that gives mass market, everyday consumers seamless access into cash deposits but also multi-asset mutual funds and ETFs as well," he said. "This is about putting away your £500 a month or whatever it is you put into savings but having more options than just cash."

BlackRock's decision to work with Chip comes as more and more savers look for ways to squeeze more out of their money with interest rates at rock bottom and inflation spiking. UK inflation is currently three times higher than the interest rate on the best easy access account on the market.

A hunt for yield is part of the reason why amateur investors have piled into the stock market and cryptocurrencies over the last year. Rabin drew a firm distinction between his business and active trading apps like Robinhood that have rode this wave.

“You can sleep at night with the comfort that it’s diversified and being managed properly," he said. "You’re not going to wake up tomorrow and find yourself up 300% on Dogecoin but equally you’re unlikely to find yourself waking up tomorrow morning and you’re down 50%."

Rabin said Chip, which has raised around £20m to date, was planning to expand to Europe.

“My vision for it is a global savings bank where it doesn’t matter who you are, how much you earn, how much you save, what currency — you can seamlessly deposit into any passive investment," he said. "If I live and work in the US, I should be able to deposit seamlessly into an energy-focused investment fund in Poland that is euro denominated should I wish to."

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