Key takeaways 

  • Britain’s dormant cash pile is a friction problem, not a rates or awareness problem. Higher rates have already been tried and the money still didn’t move.
  • Open banking is the first mechanism that attacks the friction directly: account information for real-time balance visibility, payment initiation for the transfer itself.
  • Paragon’s Spring app is the live test. £1bn of deposits in year one, with open-banking-initiated volumes doubling month on month. Whether that money stays is the open question.

 

The FCA reckons around £252bn sits in UK current accounts earning no interest at all. Widen the lens to low-paying accounts and AJ Bell puts the figure nearer £280bn. Paragon’s own analysis identifies roughly £116bn held in accounts paying nothing, including more than a million accounts holding over £50,000 apiece.

The numbers vary by definition. The pattern doesn’t. A vast amount of British household cash sits still while inflation quietly eats it.

The standard explanations are rates and awareness: savers don’t know better products exist, or the gap isn’t worth the bother. Both have been tested to destruction over the past three years, and both are wrong.

Rates already went up. The money stayed put.

Between 2021 and 2024 the Bank of England took base rate from near zero to over 5%. Easy-access savings rates followed. The gap between a current account paying nothing and a savings account paying 4% became impossible to miss, and the FCA ran a fourteen-point plan pressing firms to move customers onto better products.

The money largely stayed where it was. FCA data still shows average non-interest-bearing balances at around 2.11% of the market and roughly three-quarters of consumers making no switch at all.

That is the finding that kills the rates theory. If a 400 basis point spread and a regulatory campaign don’t shift the pile, the obstacle was never the price. It was the walk. Find the rate, open the account, verify identity, set up the transfer, remember to do it again next month. Every step sheds people, and the aggregate of that shedding is £116bn.

What open banking actually changes

This is where the mechanism matters more than the marketing. Open banking splits into two capabilities, and the idle-cash problem needs both.

Account information services let an app read your current-account balance in real time, so a saver sees what is genuinely spare rather than guessing. Payment initiation services let the app move the money on instruction, without a manual bank transfer or a standing order set months ago and never revisited.

Together they collapse the walk into a tap. That is a different intervention from a better rate. It removes steps rather than increasing the reward for enduring them, and the evidence says steps were the binding constraint.

The rails are ready. Open Banking Limited recorded more than 351 million payments in the last year, up 57%, across 16.5 million active connections, with sweeping VRP volumes up 98%. 

The live test 

Paragon Bank’s Spring app, using Moneyhub’s platform, has added a Cash ISA that automates tax-free contributions straight from a customer’s existing current account, whoever they bank with.

Guy Simmonds, head of digital proposition at Paragon Bank, called the ISA “a product our customers have been asking for”, framing it as part of a wider digitalisation strategy. Dan Scholey, chief product officer at Moneyhub, put the mechanism plainly: “Most traditional savings products still rely on manual intervention, but by embedding Moneyhub’s data and payments platform, Spring has made saving effortless and automated.”

The numbers behind it are the interesting part. Spring passed £1bn in deposits in its first year, and the majority of deposits into the app were initiated through open-banking payment technology, with daily volumes doubling month on month. That is the friction thesis with evidence attached: when the walk gets shorter, the money moves.

What to watch 

Two things will decide whether this is a fix or a feature.

The first is stickiness. Moving £1bn in year one proves acquisition works. It does not prove the deposits stay when the headline rate drifts down, and automated money can automate its way out as easily as in.

The second is commercial VRP. Sweeping VRP handles moving money between a customer’s own accounts. The broader commercial variant, which would let this pattern extend well past savings, has slipped repeatedly while the industry argues over who pays. Everything above runs on rails whose economics are still unsettled.

My judgement is that the friction diagnosis is correct and the mechanism is the right one. Rates were tried at maximum strength and failed. Automation is the first lever that addresses why the money doesn’t move rather than why it should. Whether one bank’s app becomes a market pattern depends on plumbing decisions that have nothing to do with savers at all