Potential for Negative interest rates

With the current headlines around the potential for negative interest rates…

How does this impact the services supplied by Dozens?
What (if any) communications have you had from Lloyds?
How could this impact the business model in general over the next couple of years?



This is an interesting question @Robertiwills and one I am sure that many UK financial businesses will be grappling with.

I will assume that you are really asking about our services to customers as opposed to our own fundraising (news on this soon), or how we make our money which is a different question which @AC will be much better able to answer when we next meet (news on this soon too!)

In terms of our app features, the simple answer is that it will not affect us at the moment.

We are not a bank, so we do not (and cannot) pay interest on accounts.

If anything, this is even more justification for our business model which is to help our customers look at the potential of investing for their long term financial wellness.

The Dozens Savings plc bonds are a separate product. As a marketing cost, they are not affected by interest rates. We hope that more customers may now get a chance to join us and to benefit from them, and get to explore the world of Dozens.

While investing always carries some risk (which is why we have to say ‘capital at risk’), it is a means of growing your money in the longer term (5+ years), and there are themed ETFs for different levels of risk to suit different customers. If keeping cash means you are losing value through inflation and getting even less benefit from saving it, then it does at least give new emphasis for you to look at alternatives like investments.

The fact that the Bank of England is even considering negative interest rates is not necessarily a good sign for the economy that we all live and work in, but this will not directly affect us except to make our mission to help customers even more important.

I hope this answers your main question.

I will put this, and the wider questions to AC and we hope to get back to you on this soon.

Can you explain, however, what you were meant by the reference to Lloyds?


Sorry, I thought I read that the money held in dozens accounts (grow, not bonds, and in the cards) was held by BOS , which is part of Lloyds group?

My concern was that you would be paying a fee for holding this money, and would therefore be forced to pass this fee onto the customer.


When you are talking about millions or even billions of deposits, it’s very simple for a bank to offset any negative rate. That is why still today some banks offer high rate deposits normally notice accounts but there are exceptions. The base rate is just one thing banks rely on, a well managed bank can survive a negative rate quite easily. They use Japan as an example lots of banks in Japan offer interest paying accounts. Yes they average 0.001% to 0.02% but the point is a negative rate, doesn’t mean no interest.

Hi @daedal,
it would appear I have not asked my question very well. I was not thinking about the bonds as I understand that they are essentially funded by marketing, and anything held outside of “invest” pays no interest anyway.

My question was more around the other funds held in the current account (for lack of a better term), or in the non-interest paying section of grow (I have IFTTT set up for rain). These are currently held with no fees. However, if banks start charging for holding our money, (in savings or deposits) where does that leave Dozens?
Will it increase the running costs for Dozens?

Apologies if I’m missing the point.

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I’m not sure Dozens will tell you anything to do with the private financials of it’s business. Whether or not they get paid interest or not, probably has no relevance. The bigger they are the better they can negotiate rates anyway.

That would be a shame, especially as they’re about to crowd fund. I don’t think enquiring whether the business model is sustainable is a step too far.

It would absolutely make a difference to the bottom line. Whether your assumption (that it’s largely irrelevant) is right or not is ultimately part of what’s behind @Robertiwills’s question.

I’m not sure that any institution, of whatever size, can ultimately negotiate rates with the Bank of England. :man_shrugging:

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No where did I say they would negotiate with the Bank of England, the question was about Dozens depositing with BOS not Bank of England. And yes all banks can negotiate rates if they have the money behind them with Banks and other financial organisations.

thanks all - it seems we have some misunderstandings here - not a surprise considering it is very complex.

I will try to clarify, but let me know if it is still not clear

@Robertiwills is correct, the cash savings that are held in Dozens’ Grow section are actually held in a separate account with Bank of Scotland. I was confused by the reference to ‘Lloyds’, but it is the Lloyds Banking Group, that’s true.

It is conceivable that they could decide to charge us a negative interest rate on that account, which would therefore increase our costs, that’s true. This is one of the unusual issues associated with the frankly weird idea of ‘negative interest rates’.

I will definitely let you know if anything is decided or planned on this, but I can say that we have no plans to charge for this or pass it on, but of course this might have to be reviewed depending on what those rates are and how long it lasts for. We would certainly let customers know with plenty of notice in this case, and their funds can always be kept in e-money accounts instead.

In terms of our business model, this would still not change anything. Money in these accounts is there as a means to allow customers to put money into investments, not to be held here indefinitely.

I think @daedal is correct in that the banks who provide these accounts will probably find ways to minimise the knock-on effect of negative rates by simply paying 0% interest, but I only speculate as this will be a new situation for most of us, but the comment about the Japanese experience is certainly interesting (and now there’s experience in EU as well)

In terms of us discussing our business model, we try to be as transparent as possible, so don’t worry @Peter :slight_smile:

The point here is to be ‘aligned’ in terms of incentives. If interest rates are negative, I presume this is intended by the BoE to get people to put their money into circulation in the economy. Dozens believes that a way of putting money to good use in the long term (for customers, business and the wider economy) is through investing rather than consumption & spending, and so our incentive to help customers and not have to pay fees on ‘custody’ is aligned.

I believe that the Bank of England would agree, so no negotiation required :slight_smile: