There is a puzzling trend in the European interest rate market. The European Central Bank (ECB) has made a recent effort to keep interest rates as low as possible, inciting national outrage. Despite this, however, few Europeans are taking advantage of the opportunity to open accounts cross-border in other EU Member States where they could earn higher returns. Experts view this as an indication of the disintegration of European financial markets since the crisis.
Deposit and loan interest rates vary across the countries in the EU. Often the same bank will pay its customers a different interest rate depending on which country they live in. For example, Germans have about €2 trillion, or 55% of GDP, in regular bank savings and term deposits. Deutsche Bank offers a 0.1% return on a one-year deposit made in Germany, but a 0.75% return for the same deposit made in France. In theory, these vast discrepancies should have vanished as banks moved money places with an excess of savings at places with an undersupply of saving.
Italians for instance should feel secure to put their money in Poland rather than in their domestic country, where banks and the government both have a lower credit rating. This all goes to show that, in financial decision-making, emotions play just as big - if not bigger - a role than does logic.
Also, consumers should feel comfortable making deposits and holding accounts in any EU Member State, because deposits are protected up to €100,000 ($106,000). Not even the countries most affected by the crisis have reneged on them thus far.
Some FinTech, such as Preferate.com, start making easier for European citizens to open accounts in as other EU countries without a making a physical branch visit or learning a new language. Consumers can manage their accounts online and even open accounts in countries outside the EU.