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Why are mid-tier and challenger banks more competitive?


We’re pleased to share some good news with our customers! Paragon recently picked up a prize for ‘Best Internet Account Provider’ at the prestigious 2021 Moneyfacts awards. We were also awarded ‘Highly Commended’ and ‘Commended’ status in two further categories – ‘Best Cash ISA Provider’ and ‘Best Bank Savings Provider’.

We always try to offer our customers the most competitive rates we can and the award is in recognition of our approach.

If you regularly check savings best-buy tables, you may notice that mid-tier and challenger banks, along with other, online providers often feature heavily in those tables. Indeed, recent research from Moneyfacts revealed that of the 15 biggest banks and building societies, only 6 offered rates that exceed the average easy access interest rate of 0.17%.

So why are some providers able to offer more competitive rates than others? We’ve outlined some of the factors that influence our market position.

1. We’re a specialist lender and savings provider

Paragon is a specialist lender. Within the mortgage space, we are experts in buy-to-let products and we also offer development and asset finance products to UK businesses.

We are also a specialised savings provider. We don’t offer current accounts but instead focus our expertise on offering savings products to suit all types of savings goals, from Lifetime ISAs and other types of cash ISAs to fixed rate bonds as well as easy access, defined access and notice accounts.

This specialised approach means that we are able to offer higher rates than banks that offer a broader range of ‘everyday’ products and services such as residential mortgages and current accounts.

2. We review our market position daily

We are constantly reviewing our market position in order to evaluate how we fare in the current market and we regularly adjust our rates accordingly to make sure that we maintain a competitive position.  

We recently increased the rates across all of our fixed rate bonds and ISAs in order to ensure we continue to provide choice for our customers. We also continue to offer competitive rates in the easy access and notice space for savers who need access to their money.

3. Lower overhead costs mean higher rates

As an online-based provider, Paragon does not have any branches. Operating a branch network, including the cost of premises and branch staff, adds considerably to a financial provider’s overheads. Lower overheads mean we are able to offer higher interest rates to our customers.

However, our account range is still designed with flexibility in mind, which is why we don’t just offer online accounts. All of our fixed rate products are also available to manage through the post and our customers can also reach out to our friendly call centre team if they want to speak to someone about their accounts.


Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551