After debuting its first offering for future pensioners in Poland, XTB is now looking to enter a much more competitive market. During a conference call, the company's CEO revealed that the fintech would like to offer Individual Savings Accounts (ISAs) to savers in the UK.
Finance Magnates asked XTB's Regional Director, Joshua Raymond, for more details on these plans. As he confirmed, the publicly traded company plans to apply for an ISA manager license in the coming weeks.
XTB Wants to Enter £400 Billion Market
At the end of January, XTB reported its 2023 results, after which its shares skyrocketed to historic highs. Along with the update about the increase in active clients to almost 312,000, the company also presented a roadmap of new products for 2024. In addition to the social trading and bonds offering, there was a real treat for hundreds of thousands of Polish savers: IKE and IKZE retirement accounts.
Without going into details, both allow Poles to save funds or invest in financial markets while offering additional long-term tax benefits. In total, nearly 1.5 million people in Poland have such accounts, and their value grew last year to a record PLN 23 billion ($5.7 billion).
During the conference call a day later, however, it turned out that IKE and IKZE are not everything. The fintech is also looking at a much larger retirement and savings market, namely British ISAs.
"Budgeting for the end of last year as well as this year, we want to fight for the market again, because we finally have something to fight with," commented Omar Arnout, the CEO of XTB, quoted by the Polish Press Agency. "We want to apply for an ISA, which are the British savings plans, and I hope that we will be able to compete in a market that, it must be admitted, is competitive."
27 million people in the UK have an ISA, definitely more than in Poland, and its total value is £400 billion in stocks and share saving accounts. Every year, up to £20,000 can be invested without having to pay tax on capital gains and dividends.
XTB "Anticipate Strong Take Up" of ISAs
In an interview with Finance Magnates, Raymond confirmed that XTB is preparing to launch ISAs in the UK market, and the licensing application will be submitted soon. And, there is a lot to fight for. In addition to existing ISAs, "there are nearly 12 million ISA subscriptions each year in the UK," commented the CEO of XTB UK. "This represents a huge market for XTB to be operating in."
XTB will want to attract new clients primarily through its modern application and no commissions for stocks and ETFs with monthly turnover below €100,000. However, the company did not reveal what specific products would be included in the savings account offering and mentioned: "We are working on the details."
"ISA accounts mark the next milestone for our product pipeline in the UK, which already includes ETFs, stocks, Investment Plans and CFD products. We feel this range of products offers something for clients of all investment styles, be it traders, long term investors and those that prefer active or passive investing," Raymond added.
Although Arnaout stated during the press conference that: "The UK market is not among the company's priorities," the opinion of the UK director is, naturally, quite different. He claims that XTB intends "to grow market share" in the UK.
When asked if, after IKE and IKZE in Poland and ISAs in the UK, the fintech will be planning to launch a similar offering in other markets, he admitted that the company certainly intends to "explore other possibilities," including the Pan-European Personal Pension Products.
IKE/IKZE vs ISA
IKE and IKZE are Polish retirement accounts with age limits but tax perks for retirement savings, while ISAs in the UK are open to any age and limited to tax-free growth up to a yearly contribution cap.
"Both of them are special-purpose investment accounts offering tax benefits. In general, the products are similar, but the details differ from one country to another; therefore, there is no unified solution for all markets," explained Raymond.
So, while both offer some tax incentives, IKE and IKZE are specifically retirement schemes with age requirements, whereas ISAs are more flexible general investment accounts without age limits. The key similarity is that both provide options for tax-advantaged investing suited to their respective countries' laws and regulations around retirement planning.
