Customer centric, rooted in digital and often mobile first
FinTech has been expanding exponentially over the past few years with an explosion of challengers shifting the status quo. This new breed of financial company aiming to avoid formulaic, restrictive banking by making everyday financial tasks much easier. They are customer centric, rooted in digital, and often mobile first.
D/SRUPTION takes a look at these 11 companies bringing more freedom to finance…
1) Starling Bank
Starling is one of the leading names in UK FinTech, and with good reason. Established in 2014 by former RBS executive Anne Boden, Starling has experienced huge expansion. Over the last year, their customer base has grown from 50,000 to 400,000, and the number of company employees has more than doubled. Last November, Starling partnered with the Post Office, allowing customers to deposit and withdraw cash at any one of its 11,500 branches. In 2019, Boden expects the number of Starling customers to reach one million. This year, the bank will release new products and features alongside its current accounts.
After its incorporation in 2015, Monzo quickly established itself as one to watch in FinTech. Monzo isn’t just mobile first – it’s mobile only. Users can open bank accounts on the platform, and Monzo also offers current accounts for its customers in the UK. Another interesting feature is ‘Year in Monzo’, which lists exactly what a user has spent their money on and when. This is part of an overall push for transparency, not just between financial companies but also in the relationship between banks and their customers. Last October, Monzo became a ‘unicorn’ after hitting a valuation of $1bn. After unprecedented success in the UK, Monzo is rumoured to be getting ready for a US expansion.
At the beginning of the year, Monzo was usurped as Europe’s leading digital bank by N26. The German startup is valued at $2.7bn, and claims to have tripled its customer base in the past year. N26 currently has more than two million customers across 22 European countries and promises to provide a competitive alternative to the dominant names in the banking sector, FinTech or otherwise. The funding round which secured N26’s unicorn status is the largest raised by a European challenger bank to date.
Although FinTechs challenge big banks, they equally provide them with an opportunity. Bud, for example, is working with HSBC to encourage open banking, and with First Direct to widen the options available to customers. The company was formed to improve communication between different financial products. By combining APIs and data, the startup creates a new connected experience that avoids the bottlenecks caused by poor communication.
“Bud’s vision took huge steps forward in 2018,” says Alan Walsh, Head of Network and Partnerships at Bud. “2019 will see improved standards brought in to the Open Banking regime and more FinTechs making their products available by API. These two combine to create an opportunity for exponential growth as more flexible tech allows us to create even simpler and more powerful user journeys.”
5) Atom Bank
Like Monzo, Atom Bank is a mobile only alternative to high street banking. Atom Bank is firmly committed to customer centricity, building around the user rather than making them conform to certain protocols. Founded 2014, the startup currently offers savings and mortgage products but aspires to develop into a full service bank. One of the underlying principles behind Atom Bank is personalisation – a universal trend that has hugely affected the financial services industry. As part of this, customers can log in using biometrics.
Remitly is a digital remittance company that enables low cost, online payment transfer between people in different countries. The UK based company is reaching out to immigrant communities with the aim of making a genuine difference to the lives of unbanked individuals. Their solution is a unique bank-to-cash pick up option which cuts through the bottlenecks of traditional remittance.
“Remittance is a broken $600 billion industry. The flow of money is inefficient, there are confusing, exorbitant fees, and legacy storefronts are still used to conduct business,” explains Elena Novokreshchenova, Remitly’s Vice President of Europe. “Through mobile technology, big data, and machine learning, Remitly brings down operational costs and passes those savings on to customers through great foreign exchange rates and low-to-no transfer fees.”
Remitly has been named as one of Forbes’ Fintech50 and Deloitte’s Technology Fast 500. In the past year, the company moved over $6bn through their platform and reached over one million customers.
Curve exemplifies the demand for seamless simplicity in banking and payments. Instead of carrying multiple cards and multiple passwords, Curve customers can access all of their accounts using a single card and pin. Curve makes international payments less of a hassle by placing a one per cent cap on exchange rates. Users are also entitled to one per cent cashback from a choice of retailers whenever they use their card, and they receive rewards points for every transaction. As great as it all sounds, the company has a lot to prove… The clever cards began shipping just this month.
China has emerged as a key location for FinTech growth. One leading Chinese FinTech company is Qudian, a virtual lender powered by AI and machine learning. The company makes personalised credit more accessible, allowing users to apply for short term microloans. Borrowers can choose to repay within any short term time frame, from as little as a week to six months. Qudian assesses potential borrowers on financial, social, and behavioural data, which means that loans can be instantly approved or declined. Qudian went public on the New York Stock Exchange in late 2018.
Cleo is a London based FinTech startup that advises customers on how best to manage their money. Once a customer has connected their bank account to Cleo, the company’s artificially intelligent assistant views their spending habits and offers specific pointers. Last September, Cleo closed a £10m funding round. The company now has over half a million users – the vast majority of which, it claims, are under 35. Cleo’s next steps will be to continue to expand globally and release a range of financial products.
The rise of M-Pesa is a defining moment in the history of FinTech. Founded in 2007, M-Pesa (M stands for mobile, and pesa is the Swahili word for money) is the largest mobile operator in Kenya and Tanzania. So why is a mobile operator on this list? In the developing world, mobile saturation is astoundingly high. M-Pesa offers mobile based money transfer and microfinancing, fulfilling the need for financial services at the same time as tapping into mobile culture. In November 2018, M-Pesa signed a deal with Western Union to gain access to the Union’s extensive distribution network. Expect to see more of M-Pesa outside of its African home ground in 2019.
11) Sesame Credit
While not a company in its own right, Sesame Credit (also known as Zhima Credit) is a Chinese credit model developed by Ant Financial Services Group. Using data from Alibaba, Sesame Credit comes up with an individual’s credit score. The higher the score, the easier it is to access loans from Ant Financial. Although Sesame Credit is separate from the Chinese government’s Social Credit System, it has sparked similar concerns. Regulations have developed in tandem with the market but should be watched closely. As regulation is one of the most important factors in becoming a FinTech pioneer, there is a strong impetus for all regions to be fastidious about FinTech.
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