The Importance of a Cash Management Solution in the Current Cash Environment

Apr 11th 2023

Insignis Cash recently hosted a webinar in partnership with the ICAEW to highlight the opportunity for clients with substantial cash balances. The webinar demonstrated the multitude of benefits gained from utilising a cash management solution, from increased diversification, efficient access to non high-street Banks and potential increased revenue.  

Three key takeaways:  

  • Counterparty risk management is key amid uncertainty 
  • 72% of accountancy firms are not currently using a cash management solution
  • Base Rate increases to 15-year high of 4.25% 

The importance of diversifying cash deposits has been highlighted in recent weeks amid volatility in the global banking sector, and with the Bank of England increasing the base rate to 4.25%, there has never been a more important and opportune time to optimise cash deposits.  

Why now?

Risk Management:  
Over the past month, the banking sector has been in the spotlight due to a series of failures, sparking concern about the unprecedented speed at which they have occurred. Although most of these issues are concentrated overseas, Clients in the UK have become increasingly risk-averse, prioritising the preservation of their capital over return. The adage ‘don’t put all of your eggs in one basket’ has been given new life as the emphasis on diversification is extenuated. 

Base Rate Increases:  
Last month, The Bank of England increased the base rate to a 15-year high of 4.25%, a move that cannot be understated in its significance. Whilst the base rate and savings rates are not directly correlated, Clients should be positioned to take advantage as and when banks decide to pass on the rate rise to savers.  

Are Clients taking advantage of the opportunity?

According to the poll ran in the webinar, 72% of accountancy firms are not currently using a cash management solution, a forgivable statistic given the relative nascency of the deposit aggregator business model but given the administrative burden associated with managing cash deposits, the value of such a service is evident.  

Only 7% of participants reported that their Clients are utilising more than four banks, which amounts to a maximum of £425,000 of FSCS (Financial Services Compensation Scheme,) protection for eligible deposits. Whilst 70% of participants reported that their Clients are using only one or two banks. 

The majority of participants (77%) reported that few, if any, of their Clients are actively moving funds to take advantage of the current interest rate environment. This suggests that while Clients may be open to using multiple banks, they may be hesitant to deal with the hassle of maintaining and closing multiple accounts.  

As Clients become more risk-averse and the interest rate landscape continues to shift, it is crucial for accountancy firms to provide solutions that support their Clients’ financial goals and ease the administrative burden of managing cash deposits. 

How can Insignis Cash help?

Insignis Cash offers a platform that efficiently supports Clients in maximising their savings opportunities in this fast-moving interest rate environment. 

The award-winning cash savings platform provides Clients with access to over 2,600 savings products from 40+ banks and building societies. The platform is designed to help Clients earn better interest from their cash, while reducing risk, increasing returns, and saving time. 

Insignis Cash partners with professionals, financial planners, and banks to empower savers to make informed decisions about their cash savings. The platform offers a range of deposit accounts for individuals, corporates, charities, not-for-profit organisations, pensions, and trusts.