LONDON — Online banks in the U.K. are racing to bump up the yields on their savings accounts in a bid to lure cash-strapped savers after the Bank of England increased its benchmark interest rate for a ninth time in a year.

After the new rate rise was announced Thursday, Starling Bank and Chase U.K., the U.K. challenger brand from American banking giant JPMorgan, took steps to capitalize on the move.

Chase U.K. said it would increase the variable AER, or annual equivalent rate, on its saver account to 2.7% from 2.1% effective Jan. 4, 2023.

On Thursday, Starling rolled out its first savings product, a fixed-term deposit account offering a guaranteed return of 3.25% after one year on balances of between £2,000 ($2,439) to £1 million.

“We’ve re-entered the era where banks use better savings rates to acquire customers,” Simon Taylor, head of strategy at fintech startup Sardine.ai, told CNBC.

“Those that can move quickly will, the rest will follow when their systems and processes allow them to.”

The Bank of England on Thursday hiked its main interest rate by 50 basis points, to 3.5%, its highest level in 14 years. The U.K. central bank is seeking to tame soaring inflation, which is near 41-year highs.

Higher rates are good for savers but bad for borrowers. They mean savers can get higher rates of returns on their deposits. However, those with mortgages, credit cards and personal loans to pay are charged higher interest.

Deposit incentives from the neobanks could well eat into the companies’ profitability. Fintech is notorious for its unprofitable firms, which tend to prioritize breakneck growth over making money in the short term.

Chase expects to lose $450 million on its overseas digital bank in 2022 and a similar amount in the next few years before hitting break-even in 2027-28.

For its part, Starling reported its first year of profit in the fiscal year ending March 2022 after significantly growing its loan book.

We have moved from a world where lending was cheap and deposit rates low to one where lending is expensive and deposits generate higher returns, Taylor said.

“The wave of challenger banks arguably now makes that more competitive,” he added.

It is not the first time an internet-based bank in the U.K. has bumped up rates on savings to higher levels.

First Direct, a subsidiary of HSBC, this month started offering 7% interest, on the condition customers deposit between £25 and £300 a month up to a maximum of £3,600, and can’t withdraw for a year.