Something’s in the air as fintech gains steam
In the past few days, fintech has been added to Merriam-Webster’s dictionary. And The Daily Mail has run an article entitled ‘Would you trust your salary to a startup? We take a closer look at how safe new banks and so-called fintechs Monzo, Revolut, Starling really are’.
In a nutshell, relax, Middle England, Monzo and Starling are safe. They are both licensed banks and are covered by the Financial Services Compensation Scheme in the same way that the big High Street players are.
Revolut, however, is all kinds of awful, according to the newspaper. It reports that the Financial Ombudsman Service has received dozens of complaints about the startup since April and social media websites are being flooded with frustrated customers.
For example, despite the messaging on Revolut’s website of being ‘better than your bank account,’ it is not a bank, nor is any money held with it covered by the FSCS.
Negative press aside, the UK fintech bandwagon has some serious momentum right now. The Open Banking Standards are proving to be a driver of innovation and competition.
Version 3 was recently published, building on the version of the Standards that launched in March and effectively giving account providers who implement them in full, a solution that complies with the EU’s second Payment Services Directive (PSD2).
Late last week, OakNorth, a lender to small businesses, was valued at US$2.3 billion after it completed a US$100 million fundraising to help license its artificial intelligence loan system to other banks outside the UK.
The challenger bank has doubled its loan book to US$2.2 billion since the start of the year and expects to lend another US$600 million by the end of 2018.
Meanwhile, mobile-only current account provider, Monese, has secured US$60 million in capital as part of its Series B funding. The investment, which will be used for product development and international expansion, brings the total funding since launch to US$76 million.
Nearly 600,000 users have signed up across the UK and Europe, monthly new customers have tripled since the end of 2017, and customers are now moving more than US$2.5 billion each year through Monese accounts.
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The venture now also allows eligible customers to open European IBAN accounts in 20 countries. Its product is powered by a proprietary technology that conducts KYC (Know Your Customer) checks globally in real-time.
This enables the creation of an account in as little as 120 seconds regardless of citizenship, proof of address or credit history. Monese says that it can cater to “a diverse set of internationally mobile customers currently underserved by traditional financial institutions”. The company adds that 75 percent of all Monese funds are coming from regular salary payments.
Note the use of ‘underserved’ and ‘diverse’. Words like these are powering the fintech revolution, along with transparent and customer-centric. The Daily Mail might be left scratching its reactionary head, but a growing number of people are seeing that there is finally a vibrant alternative to the tired old High Street banks.