New banks

Rize’s new fiat-based high-yield savings account challenges its counter crypto options

  • High-yield savings accounts tend not to yield such high APYs. Crypto-based options have been stepping in as a more rewarding alternative.
  • But crypto is volatile and these accounts come with risks. Rize’s new fiat-based solution comes in with an alternative.

Email a Friend

Rize’s new fiat-based high-yield savings account challenges its counter crypto options

This month, Rize, a fintech-as-a-service company, partnered with YieldX, an AI platform focused on income investing, to build a high-yield savings account option that’s fiat-based, rather than crypto-based. 

Through the account, consumers can choose yield targets of up to 8%. The account also has a built-in embedded compliance system covering both banking and regulatory ground. There’s same-day liquidity and no requirements surrounding things like deposit, withdrawal or holding period.

The account is built up of a set of APIs. YieldX’s algorithms determine the lowest risk and highest yield funds. The end result is that Rize’s fintech clients are able to integrate this account into their own offerings.

Typically, to hit targets like these, companies need to rely on crypto in some way. Otherwise the APY will be considerably lower. 

Ally Bank, Chime and Goldman Sachs’ Marcus, for example, all offer an APY of 0.5%, with no minimum balance. Meanwhile, crypto firms like Gemini and are able to offer APYs of around 8%.

Still, relying on crypto firms like these come with risks for the consumer, including crypto volatility. And for fintechs hoping to offer high-interest savings, opting for a crypto-based move could mean an expensive and bulky integration process.  

The main appeal of Rize’s new product is that it seems less risky overall compared to  crypto-based options. There’s no chance of crypto volatility and it’s cheaper and easier for companies to integrate. 

“While products like this may be complex in nature elsewhere, we wanted to ensure that fintech startups building out their product offering are able to include an account like this which will be highly attractive to potential customers without the added challenge of building it in-house,” said Justin Howell, CEO of Rize.

Another difference Howell mentions is built-in regulatory compliance. Companies have gotten in trouble in the past with their high-yield interest products for not complying with regulations.

BlockFi, for example, offered a high-yield interest account that, according to the company, could earn up to 9.25% on crypto deposits. Last month, however, the company got in trouble with the SEC for not properly registering itself as an investment company. This resulted in BlockFi being hit with $100 million in penalties. In 2021,Coinbase announced it was dropping its high-yield product after warnings from the SEC that it would take legal action.

Still, there have been some challenges with making a product like this work, according to Howell. That’s included things like avoiding regulatory mishaps and dealing with fund flows.

“What was particularly time-consuming was surfacing the ability for clients to offer very discrete account types across the FDIC-regulated world and SIPC regulated world, ensuring appropriate disclosures for consumers, and making sure that the pipes were built to enable this easy funding between custodians,” he said. “However, given our unique ledgering technology that was built to be cross-vertical, we didn't have to start from scratch. Ultimately time, effort, and willing partners were needed to map out how to deliver this product to clients, whether fintechs or non-fintechs.”

Rize’s new savings product still hasn’t launched, but as current interest rates hikes take effect, it will be interesting to see what type of attention a product like this could attract in the market. 

“In the near term, while interest rates will rise, banks are so flush with deposits that they are not likely to increase savings rates themselves – which then leaves consumers in a place where loans are costing more but they’re not receiving the benefit of the savings,”  said Howell. 

“Opening these accounts in the brokerage world ensures utilizing the dynamism of fixed income markets and allows us to offer competitive yields no matter the underlying monetary policy.”

0 comments on “Rize’s new fiat-based high-yield savings account challenges its counter crypto options”

New banks

‘We’re shortening the distance between consumers and the products they want and need’: MoneyLion’s Dee Choubey comments on Q3’23 and more

  • MoneyLion delivered strong third-quarter earnings and revenue last week.
  • Dee Choubey, co-founder and CEO of MoneyLion, discusses where the firm stands today and the trends propelling digital banking heading into 2024.
Sara Khairi | November 14, 2023
New banks

‘Fintechs need to do a better job of talking about how we’re at the forefront of trust and security’: 5 questions with MoneyLion’s CEO Dee Choubey

  • MoneyLion's revenue increased 34% to $93.7 million in Q1 2023 from $70 million in Q1 2022.
  • Tearsheet spoke with MoneyLion's Dee Choubey about the increased revenue for the quarter, the advancing role of AI in banking, and how the banking crisis is affecting fintechs.
Sara Khairi | May 18, 2023
New banks

5 questions with Stash CEO Liza Landsman

  • Stash continues to grow, expanding its B2C offering while it expands into working via a B2B model.
  • We recently caught up with new CEO Liza Landsman about her new role and where the firm is headed.
Zachary Miller | May 04, 2023
New banks

Quick Take: MoneyLion partners with Column Tax – but how does the partnership align with the former’s product suite?

  • In order to provide convenient tax filing experience to its customers, MoneyLion has partnered with Column Tax. So how is this partnership in line with its product suite?
  • MoneyLion shareholders have had a rough ride lately as the firm’s share price tumbled 80% last year and 18% in February this year -- can the company gain ground in the long term on the strength of its underlying businesses?
Sara Khairi | March 16, 2023
New banks

Gamifying financial literacy is tough. Can Greenlight’s Level Up get it right?

  • Financial literacy games can be gimmicky and may fail to find the balance between “game” and “education”.
  • Level Up by Greenlight focuses on gamification in a manner that's sticky, but for the right purposes.
Rabab Ahsan | February 17, 2023
More Articles