Fintech makes the world go around

November 28, 2018  1:21 PM

Lloyds Banking Group in Google maps mash up

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Lloyds banking Group is introducing a service that enables its online banking customers to see where and when they spend their money on Google Maps.

This is a fintech mash-up that looks a bit gimmicky was my first thought but it does make a lot of sense.

Lloyds bank and its Halifax and Bank of Scotland subsidiaries have introduced the service for Android users initially with integration for iOS users planned to have access to in a couple of months.

It does make sense to be able to quickly look at a map too see where you are spending money. If money goes missing from your account through an unknown payment it will be easy to spot. The tool will enable users to see the precise location where they made payments, along with the details of their debit card transactions.

Good for security and peace of mind for consumers then.

Paul Davis, retail fraud director at Lloyds Banking Group, said: ‘Helping keep our customers’ money safe is our priority, and our new Google Maps feature is another way that we can work together to help protect our customers from fraudsters.

‘Card not present is still the most common type of fraud, and by customers to see exactly where they have made card payments with this new feature will help spot suspicious activity as well as cut down on inconvenience of blocking card transactions.’

But I think there is an even bigger opportunity for the banks to sell on the data it collects, anonymised obviously, to retailers via a similar tool. They could use it to help them make decisions about where to locate or advertise.

November 14, 2018  10:03 AM

CYBG scraps Virgin Money digital bank project

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As  predicted a couple of months ago Clydesdale and Yorkshire Group (CYBG) has ended a project to build a digital bank, following its £1.7m takeover of Virgin Money. Mind you it was hardly surprising given the overlap that would occur.

Back in September a source told me that this was a likely outcome following CYBG’s takeover of Virgin Money. This was because CYBG already has a successful digital banking platform, known as iB which supports the its digital bank B, which has over 200,000 customers.

Virgin had already spent £38m on the digital bank project but it has announced that this will end as well as a contract with 10x Future Technologies which was supporting the project.

10x Future Technologies was set up by former Barclays CEO Antony Jenkins.

A CYBG spokesman said: “10x Future Technologies has been a valuable partner to Virgin Money through its digital journey.

“However, since we first announced our proposed acquisition of Virgin Money we have been clear that we plan to use CYBG’s existing iB technology platform.”

After creating digital banking platform iB, CYBG created its B digital bank. The success of the latter led it to migrate all its brands to the iB platform. This has given customers of Yorkshire and Clydesdale banks the same functionality.

CYBG CIO Fraser Ingram recently told Computer Weekly it was always CYBG’s plan to migrate its traditional banking brands to the iB platform once it was proven through B.

CYBG has already migrated Clydesdale and Yorkshire bank customers to the iB platform and it is likely Virgin will be next.

But unlike the core banking platform change CYBG takes a different approach. Ingram told Computer Weekly that a lot of banks have gone after modernising core banking platforms. “This is very high risk and does not really give you differentiation. To change the back end of a bank when you have got live customers, you have to be sure that what you get will work and will actually give you a point of differentiation.”

“The differentiation comes in how customers access their information and how the bank and customers use this information.”

Read more about CYBG  IT

Will CYBG integrate Virgin to its digital platform and is it curtains for Virgin’s digital bank?

 CIO interview: Fraser Ingram, Clydesdale and Yorkshire Bank

 If Virgin Money combines with Clydesdale and Yorkshire its digital bank project could be canned

November 6, 2018  11:41 AM

The fintech interview: Part 9 TrueLayer

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In the latest fintech interview I feature a company which doesn’t provide financial services to businesses or consumers, but enables other fintechs to do just that.

It is one of those companies that fits into the second syllable of the noun fintech and is a product of the open banking revolution.

Meet TrueLayer. Set up in London in 2016 by Francesco Simoneschi and Luca Martinetti, after years of working on separate start-up projects the friends got together on a project fintech project encouraged by the changes in the banking sector.

TrueLayer finds itself in the heart of the tech part of fintech as an application programming interface (API) supplier to fintechs.

It provides an API that enables software developers at fintechs to create services that use information from banks. It enables them to be “a secure conduit between the banks and third party applications,” according to Simoneschi.

It is a child of the open banking revolution in Europe. The EU’s Payment Services Directive (PSD2) and the Competition and Markets Authority’s (CMA’s) rules for open banking in the UK, means banks must be able to give third-party financial services suppliers access to customer data, if the customer agrees, through application programming interfaces (APIs).

TrueLayer began in 2016 when Simoneschi and Martinetti, both with engineering backgrounds, decided to get involved in the changing fintech sector.

It launched its first product, which was an API to access customer banking data. It took 6 months from having the idea to offering the API to developers for feedback and 12 months to have its first paying customer.

Today peer to peer lending platform Zopa is a flagship customer on a list of fintechs which includes ClearScore, Canopy, Plum, BitBond, Emma, Anorak, and CreditLadder (featured in an earlier interview).

Zopa uses TrueLayer for faster income verification, Canopy to automatically update its customers’ rental information, Plum to connect its chatbot with Monzo and Starling Bank accounts, and Anorak to provide more accurate and timely insurance quotes.

In the old world people have to send statements to prove their finances but through the API integrated by a financial service customers banking details are automatically shared if the customer permits. This makes things like customer onboarding easy and can provide customers with additional services based on their finances.

“Fintechs and other businesses can easily verify identity and account ownership using existing customer data; view accounts, check balances, and access transaction history; query bank accounts and cards to build powerful applications; and mitigate fraud and enhance credit scoring modelling using detailed income and expenses data from users’ bank account,” according to TrueLayer.

Customer fintechs are charged by number of bank accounts they connect to through TrueLayer.  As a result it is scalable and customers can range from the smallest fintech all the way to the largest consumer platforms.

The London based company now has 40 staff. It is on an aggressive product roadmap with plans for news offerings

But having a business plan so interlinked with legislation creates the biggest challenge.

“As our product was tackling and capitalising on a big legislative change we had to track and respond to the evolving regulatory environment,” said Simoneschi.  “The landscape could quickly change as the regulation advanced and our product had to develop accordingly.”

To this end the team had to design the product around different scenarios and hire experts with the agility to execute these scenarios.

The challenges continue. “As Open Banking is still a relatively new concept there is plenty of work to do to make it mainstream and widely accepted by consumers,” said Simoneschi.  “We’ve seen that consumers who encounter Open Banking-based services are generally very willing to let their financial data be used. However, we know that this trust is fragile.”

“This is why we’re developing our services to include mechanisms that increase trust and transparency. Through this we can educate consumers on their rights, make it clear how Open Banking works, the benefits and the businesses they can trust.”

Potential changes to regulation is not its only government instigated challenge. Simoneschi said Brexit is a major cause of uncertainty for the company. “Added to [regulatory] complexity is the uncertainty around Brexit and the impact it is going to have on the financial services industry.”

But like most startups and early stage companies, to coin a sporting cliché, TrueLayer ‘can only play what is in front of it’. To this end it wants to have the best team in place for the challenges that crop up.

To this end it is always looking for tech professionals that understand simple design and iterative development, to join its ranks.

Beyond its tech skills it wants “people who have a great attitude, ambition and a hunger to learn”, which according to Simoneschi are “always at the front of the hiring queue.”

He added that the company needs problem solvers. “They see a challenge as a way to create an innovative solution and test their abilities, not as a headache or a roadblock. We work in such a cutting-edge field that experts simply don’t exist yet, so it’s crucial they can learn at lightspeed.”

Read the previous fintech interviews

Part 8 InvestCloud, Part 7 ClauseMatchPart 6 Rebuilding Society, Part 5 HonchoPart 4 AkoniPart 3 WriskPart 2 CreditLadderPart 1 Taina Technology

November 2, 2018  7:44 AM

Fidor Bank to separate from BCPE after short marriage

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French banking giant BCPE is selling challenger bank Fidor which it acquired In July 2016, to accelerate its digital transformation.

The short lived coming together reflects the challenges faced by traditional banks that try and buy their way into the digital banking, without a compelling business strategy.

Read Chris Skinner’s blog post about the latest at Fidor

Fidor, which was launched in Germany in 2009 and gained a banking licence in the UK in 2016, was an early challenger bank. It quickly gained momentum, through its disruptive tech driven business model, before being acquired by BPCE.

At the time BCPE chairman, François Pérol, said: “This is a key step in the acceleration of the digital transformation of our group. It further demonstrates our commitment to innovation, to developing a customer-centric approach enabled by digital banking technology, and to be more involved in the digital and mobile banking field.”

BCPE has over 35 million customers, more than 100,000 staff and thousands of branches in France,

But Fidor is now up for sale as things haven’t quite worked out as planned.

One source said BCPE never really had a strategy on how to take Fidor forward.

BCPE is the result of a merger of two centuries old French banks, and as a result its culture was not able to truly integrate a company like Fidor.

Chris Skinner, chairman of the Financial Services Club and fintech expert has followed Fidor since it was formed. He told Computer Weekly the sale by BCPE is a warning of the difficulties facing traditional banks moving from offline to online banking.

“This shows the difficulty of bringing traditional old banks into the digital age because there is a clash of culture,” he said.

Fidor could be targeted by tech companies looking to get into banking as well as other challenger banks that want to scale up or another traditional bank that feels ready to take a giant leap into true digital banking.

Fidor was an early fintech player and offers a retail banking service as well as its open-technology platform to other banks as a service.

In its own banking service, Fidor uses social media to overcome the cost and complexity of traditional banking, and increases customer trust through an online community.

Through an application programming interface (API), it enables third-party financial services to plug in to its system. This means current account customers can access many different services and can deal in foreign currencies and precious metals with the same current account, for example.

Read more about Fidor Bank

Computer Weekly talks to the man behind the digital challenger bank recently acquired by French retail banking giant BPCE.

Fidor Bank is the latest challenger financial services firm to start operations in the UK after the German company announced its UK launch.

Spanish broadband and mobile operator ready to offer financial services via O2 Banking using the technology of startup Fidor.

November 1, 2018  10:20 AM

IR35 changes could see banking IT jobs offshored

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The latest changes to the rules around how much tax contractors pay sees the IR35 rules move to the medium and large private sector companies.

This means private sector companies will be responsible for determining whether or not contractors they engage should be treated as off-payroll workers or full-time, salaried employees when paying tax. Previously, it was up to the contractors to self-declare their tax status. Previously it was public sector contracting only.

The banking sector is a massive employer of IT contractors so much of the tax paid comes from the sector.

But the baking sector is also a heavy user of offshore IT services, which according to a financial services IT professional contact of mine, could be increased as banks try to avoid complications.

Here is what he said: “If IT contractors are to be taxed like employees but without the staff benefits, I imagine many will either seek a rate rise or ask to become employees. Neither of these options will appeal to the banks so it gives them a perfect reason to move more IT roles offshore.

So I would expect more brain drain and banking IT job cuts in the UK. If the government gets too greedy, global businesses can and will find alternative solutions.”

My colleague Caroline Donnelly has written extensively about IR35. You can read some of her articles here.

October 31, 2018  10:32 AM

The fintech interview: Part 8 InvestCloud

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In this edition of the fintech interview series I caught-up with a fintech that is quite a bit further along on its journey than some of the previously featured companies.

Founded in 2010 InvestCloud offers investment managers a software as a service based platform that allows them to run any part of their business. It is another example of how fintechs can offer small and midsized financial firms services that only large firms would normally have access to.

In this case, as the name suggests InvestCloud targets the investment sector with a cloud service. It has taken all the know-how required to run trading firms and put it into a cloud based package. It is aimed at the mid-market. Customers include asset managers, investment banks, wealth managers and hedge funds,

The software is split into modules, which include tools to enable customers to communicate with clients, manage clients, automate processes, do analytics, complete reports and do all the back office trade processing. Because the product is modular some firms want the entire end to end package with a module for every business need, while others might just take one.

The software is designed to enable business analysts and designers to customise the software rather than expensive programmers. To this end it created a technology known as programmes writing programmes (PWP) which provides code generation that allows business analysts and designers to customise.

Will Bailey, executive vice president Europe and Innovation at InvestCloud told me: “Programmers are good at writing code to solve complex problems but when it came to workflows and visualisations and specific customisations that clients need we thought there must be a better way.”

The idea for this has a lot to do with the background of original founder John Wise, now CEO. He was previously co-founder of data warehousing company Netik which is used by some of the largest investment banks in the world, providing data and reporting services.

Bailey said the Netik product is expensive and out of reach of companies other than the very largest. “It had a price tag attached to it that was too large to take out to the broader middle market.”

After Netik was sold the team got together and identified the problem that programmers were required for any customer specific work. Bailey, a software engineer himself originally, worked in the US defence sector before moving into financial software working on trading systems. He met the investCloud original founders in 2011, the year after it was founded.

“We realised that the designers and business and analysts need to be able to make changes,” he said.

To this end InvestCloud’s engineers focus on building the code generators that business analysts and designers at customers can use. “When customers want very specific designs we deliver the tools to create them directly to them, the people that understand the problem.”

Small firms will often ask InvestCloud for modules for everything while bigger things might request support integrating their existing systems

As I said at the beginning of this post InvestCloud is further along its journey than many of the previous fintechs interviewed. It has a customer base of 700 companies and its platform is used by companies to manage over $1.7trn of investments.

It has established more traditional investment companies as well as challengers amongst its customer base.

There is a long list of customers. These include: AMX, Anchor Private Clients, APEX Clearing, Capital GroupChilton TrustConifer Financial Services, Dinosaur Merchant Bank, FCI Advisors, Nutmeg, and .WeInvest

Most customers use InvestCloud’s multi-tenanted SaaS platform but some clients prefer a private cloud, which is also available

When InvestCloud, which began in a garage in California, won its first customer in 2012 it had around 20 members of staff and now it has over 300 globally. “We are now an established organisation and no longer in startup mode.” It has operations in various US cities as well as London and Bangalore

The majority of InvestCloud’s staff business analysts and designers and the tech team is deliberately small and experienced. “Because we do not have to do much customisation we can keep the tech team small and have people that understand the business do things for our clients,” said Bailey.

Bailey said the biggest challenge in the early days for InvestCloud was “getting people to really understand the value of the cloud.” Hard to believe today but Baily said: “In 2010 the fintech industry was very much a local install base and there was a lack of understanding of the value of the cloud. “We had to do a lot of education.”

“But around 2014 people started to get it and now I rarely get a question about the cloud. People have accepted cloud is the right decision,” added Bailey.

The opportunity in the future is multi-billion dollar said Bailey because investment companies have been underserved by digital.

Read the previous fintech interviews

Part 7 ClauseMatch, Part 6 Rebuilding Society, Part 5 Honcho, Part 4 Akoni, Part 3 Wrisk, Part 2 CreditLadder, Part 1 Taina Technology

If you are a fintech and want to feature email me on

October 24, 2018  1:03 PM

The fintech interview: Part 7 ClauseMatch

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In my latest Fintech Interview I feature another company in the RegTech space.  Meet London based ClauseMatch.

The company’s cloud based software automates the process for banks to prove they comply with regulations. This is done through a centralised cloud based platform that uses artificial intelligence to piece together different bits of information from different parts of the business.

“We centralise information that helps banks show that they meet regulations,” said co-founder Evgeny Likhoded.

Working as lawyer at a bank Likhoded realised that enterprises were stuck in the 1990s when it came to sharing information that could help them prove they comply with regulations.

His passion for technology and his understanding of the problem helped shape the company he created.

“If you think about how banks have operated for many years and all the regulation that has come out, it is very difficult for them to show that they are complaint with a regulation,” he said. “This is partly because people work in silos. Information is spread across the organisation and it is not easily accessible and centralised.”

He was living the nightmare himself. But while working in the legal department at Morgan Stanley he became involved in a project to introduce collaboration between departments to support compliance efforts.

During this project he thought it could go further and believed a platform that can bring the knowledge from the entire company into one place and automate processes would help banks become compliant.

After getting support from another lawyer, as well as some capital and began work on a prototype, which was completed a year later. He then left Morgan Stanley and with his co-founder established ClauseMatch.

This is when the company approached the market for feedback and it quickly turned out the company should take a different approach.  “Initially we thought that it would be most suited in legal departments at banks but this turned out to be very difficult because the legal profession is very conservative,”  added Likhoded.

The process got ClauseMatch on the map, said Likhoded, and in 2014 it got selected to part of Barclays’ first Accelerator programme run by Tech Stars. “This put us in contact with Barclays staff and mentors and that is when we pivoted the product to address more use cases, not just legal. We started working with compliance and risk professionals from Barclays and later BBVA when we won a challenge it set.”

It was 2015 now and the platform moved towards automating compliance and risk processes. “We help with compliance documentation and we use natural language processing and machine learning to link documents to the regulations they address,” said Likhoded.

In 2016 Barclays Bank became the company’s first customer with a global roll out of its platform. Over 1000 people at Barclays are using it.

After the Barclays contract was done ClauseMatch grew quickly from having six staff to 15 by the end of 2016. “We needed more customer support, quality assurance and  product people to support that contract.”

Today ClauseMatch  has 43 staff.

“We then saw that we can work with big banks and know how to deploy into big banks

It now works with a number of large banks but can only talk about its relationship with Barclays. Likhoded said the company is about to sign a deal with a challenger bank. “It is not just for big companies but pretty much any regulated organisation,” said Likhoded.

The company, which is currently only in London, at Level 39 in Canary Wharf, is looking to expand into New York and Singapore.

While the company is up and running now it, like any startup journey, has faced difficult challenges.

Likhoded said raising money was the most difficult part of setting up and he said any founder of a startup needs stubborn determination to continue even if they run out of money.

He said there are hard times when founders might think of giving it all up and going back to  a 9 to 5 job. “When a  thought like this comes in your mind just think that if you didn’t exist the problem you are solving would still exist and someone at some point will come and try to address it, so why not you?”

Challenges continue but change for any growing business. The biggest challenge for ClauseMatch today is adjusting to the slower process involved with working with bigger customers

Technical staff is always a challenge and there is always a shortage of people in data science and front end developers because everyone is looking for them, according to Likhoded.

“There are thousands of startups in London competing for the same staff.” He said big banks are not really competition for staff despite the high salaries they offer. “We have not lost a single person to a big bank. The type of people we try to hire are those trying to escape the large corporate world.”


Read the previous fintech interviews

The fintech interview: Part 6 Rebuilding Society

The fintech interview: Part 5 Honcho

The fintech interview: Part 4 Akoni

The fintech interview: Part 3 Wrisk

The fintech interview: Part 2 CreditLadder

The fintech interview: Part 1 Taina Technology

If you are a fintech and want to feature email me on

October 23, 2018  1:11 PM

Blockchain not the best technology for every use considered, says Australian government report

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Interesting article on about an investigation into using blockchain for government services, carried out by the Australian government’s Digital Transformation Agency (DTA).

The DTA was given $700,000 (£385,000) to investigate and came to the conclusion that there is an existing technology better than blockchain for every use in government it considered.

The investigation included a number of government agencies developing prototypes for the use of blockchain to deliver services. These included the Department of Human Services for welfare payments and the Department of Home Affairs for cargo settlement.

According to the report DTA chief digital officer Peter Alexander said: “Our position today, and this is an early write-up, is that blockchain is an interesting technology that would be well worth being observed, but without standardisation and a lot more work, for every use of blockchain that you would consider today there is a better technology.”

He said standardisation of blockchain might open up more opportunities for its use in providing government services.

“We’re not saying that blockchain doesn’t have potential but today, without standardisation, there is the challenge of blockchain becoming a little fragmented. When we get to the standardised blockchain then the opportunities for it will grow.”

At the  recent Blockchain Live event in London Vikesh Patel, head of UK, Ireland and the Nordics, at payments company Swift, which is owned by banks, also said standards are key if blockchain is to live up to its hype.

Patel said the need for standards was top of the wish list when it came to transmitting a piece of information to ensure it could be relied on.

“We have been looking at how we can support innovation in our ecosystem, and our primary work has been around standards,” he added. “In the many-to-many cross-border space, ISO20022 is the standard used to send financial messages. We have been looking at ways of applying that in our messaging today, and looking at new technologies including blockchain.”

Australia’s new prime minister, Scott Morrison, who is a fan of fintech, open banking and the technologies such as blockchain that will drive Australia’s future.

As treasurer, before being installed as prime minister, Morrison urged attendees at the Australian Fintech Awards in early August 2018 to take advantage of the disruption wave sweeping through the global economy.

“I am frankly counting on you not to stuff this up. You need to make this work…In today’s global economy, the ability for economies to become more productive is not being done the old way: the biggest transformer of productivity [will be] innovation,” he told attendees at the awards, as reported by the Australian Financial Review.

Read more on Computer Weekly about blockchain in Australia

October 19, 2018  12:12 PM

The fintech interview: Part 6 Rebuilding Society

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In the sixth interview in this series I speak to Rebuilding Society, a fintech operating in the peer to peer lending sector.

It is a great example of how fintechs can offer customers a better deal and have different revenue streams in tech and financial services. It is also a good example of some of the stuff going on outside London.

Leeds based Rebuildings Society was set up by Dan Rajkumar in 2012, on the back of the success of companies like Zopa.

The peer to peer lending platform generates loans for SMEs, and being a tech firm it makes also money selling tech to organisations setting up peer to peer lending services.

Being a small company that can respond to customer needs it offers a fairer service, according to Rajkumar. He said borrowers get a better deal. “When you are a business and you borrow from a bank that agreement is with the bank and it can call it in at any time. They also take quite a high margin with low savings rates,” explained Rajkumar.  “I created Rebuilding Society to give everyone a better deal.”

Rajkumar graduated with a degree in computing management from Leeds University in 2002. He has that mix of tech and entrepreneurial skills so important in the fintech space. “I have always had an interest in computing and I started a small company which helped businesses trade in different languages, known as Web Translations.”

He moved into the fintech industry about six years ago and took an interest in peer to peer lenders like Zopa. Soon after Rebuilding Society was born.

The platform itself relays all the payments from the borrowers to the lenders with all the interest is paid to the lenders. “Everyone gets a better deal. Essentially it has the ethos of a building society, but online and for business loans,” said Rajkumar. Rebuilding Society takes an arrangement fee from the business taking the loan as well as some other administration fees.

It took the company about nine months to have the first version of the platform on the market and about another six months “to get momentum” said Rajkumar.

There are currently 14 members of staff, but the company also uses software developers in Eastern Europe, Central America and the Philippines.

About.250 businesses have so far borrowed through Rebuilding society since 2013 when it started lending. The average loan that goes through the platform is about £75,000 said. Rajkumar said that many of these customers have come back when they need refunding.”

One of the advantages of a company like Rebuildings Society is businesses can borrow form people they want to.  Rather than   just borrow from big banks and see their money channeled through London borrowers can get loans from local businesses or even from their own employees so interest flows to them rather than big banks.

Furthermore lenders can use the ISA investment allowance to receive tax-free interest and tax-free capital gains on funds lent through peer-to-peer lending platforms

When Rebuildings Society made its the first loan in 2013 the peer to peer lending sector was unregulated. In 2014, when it became regulated, companies operating in the sector could operate under a status of regulatory approval pending full approval. Rebuidlings Society got FCA approval to be a peer to peer lender, or Network Principal as the official title is, in 2017.

This opened up new revenue stream for the company. As a Network Principal it could become the platform for other organisations in niche markets looking to offer peer to peer lending in their communities.

“This is very important in niche markets. For example we are working with a Sharia compliant platform at the moment as well as property crowdfunding platform,” said  Rajkumar.

 A spin-off company, White Label Crowdfunding, which licenses the same technology used by Rebuilding Society was created.

Today more of the company’s profit comes from licensing the technology than through the commission for setting up the loans. “The peer to peer lending sector has become fragmented with businesses focusing on their niche. As a result we see growth coming from partnerships although we do want to grow are direct business.”

He said partnerships include working with organisations targeting specific markets and helping them with technology and compliance.

The company is also working on services that will take advantage of open banking. “We are doing some exciting things around open banking and we are going to apply to become a Payments Institution Service Provider.” This will enable the company to create technology for financial intermediaries that automates the relay of investment funds. This helps intermediaries return funds to investors, brings more transparency and automate banking administration

Rajkumar said the main challenge today facing fintechs like Rebuilding Society is marketing.  “We have to bang the drum a bit more.”

He is not just shouting about Rebuilduing Society but also the fintech sector in the North of England through his directorship of Fintech North, which creates events to bring together fintechs in the region.

Read the previous fintech interviews

The fintech interview: Part 5 Honcho

The fintech interview: Part 4 Akoni

The fintech interview: Part 3 Wrisk

The fintech interview: Part 2 CreditLadder

The fintech interview: Part 1 Taina Technology


If you are a fintech and want to feature email me on


October 17, 2018  7:41 AM

The fintech interview: Part 5 Honcho

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In this instalment of my fintech interview series meet Honcho, a startup created to take on the price comparison websites in the car insurance market.

This is a case of a startup disrupting the existing disrupters. Price comparison companies were the early tech pioneers in insurance, and have largely replaced traditional insurance brokers. Now they themselves face competition from a new breed of companies known as insurtechs.

Honcho offers a free mobile app which rather than the asking the customer looking for the best deal, they put their requirements into the app and the insurance providers make bids to the customer. Insurers pay £1 to bid and there are three rounds of bidding, with insurers able to see what prices competitors are offering. Makes sense as insurers are usually happy to offer a better deal if you have a better deal on offer.

It all started in Newcastle in August 2014 when the company was formed as YuCo, which was received capital in December 2014 with a mixture of investment from wealthy individuals, business angels and local venture capitalists. Further injections of private capital were made during 2015 by several of the existing shareholders. Then in October 2016, it received more capital and in November it changed its name to Honcho Markets Limited.

I first came in contact with Honcho in December last year when it announced it was trying to raise its next round of capital through a crowdfunding platform, after European Union (EU) funds allocated to support its launch were put on indefinite hold due to Brexit. The company was preparing to launch when the EU funds were put on hold and was left with a £650,000 shortfall. More on this later.

Frank Speight, chief commercial officer at insurtech Honcho, who describes himself as a “late founder” was brought in back in 2015 to add some insurance industry know how to the project. He told me the story.

He was contacted by a headhunter asking him if he knew anyone with expertise in the insurance industry, including a good understanding of the regulatory requirements. “The headhunter was calling on behalf of Honcho and wanted some names of people I might know as I was his only contact in insurance,” said Speight.

Speight asked about the company that wanted the information and was told it was a startup looking to take on the price comparison websites. “When I finished laughing and choking on my cornflakes I asked him to hook me up with them so I could really understand what they were doing so he could advise them who to talk to,” said Speight.

Twenty four hours later he found himself sitting down with the two original founders. “I went in to the room very skeptical, but came out after two hours thinking they may have something.” He asked for 48 hours to have a think about it and went back with his advice on how he thinks the company could succeed. Within a few hours, Speight was offered the job of CEO, which he took.

The original founders were North-East based serial entrepreneur Hossain Rezaei and a former British army soldier, who had an interest in telematics and Internet of Things. “They looked at price comparison websites and thought there must be a better way of doing that,” said Speight.

When Speight met the founders in March 2015 they had already built a version of the app. But while the technology was being developed little had been done to generate potential business, and to meet the regulatory approval that it would inevitably need. Speight said: “When I asked them how many insurance companies have you spoken to and they said none. When I asked if they had FCA approval they said no. And when I asked them when they are going to launch they said June.”

“Over the next four months I began all the conversations with the insurers with the FCA,” said Speight. He had interest from insurers and conceptual agreement from FCA, a marketing plan was in place and then it was time to raise capital.

Former hedge fund boss Gavin Sewell later took over as CEO at Speights behest, with Speight moving to the role of commercial director. “I was too old to be CEO,” he joked

This takes us to November 2017 the point when the plug was pulled on its EU funding. With a £650,000 shortfall the company decided to source through crowdfunding platform CrowdCube, with Investors getting shares in the company. It exceeded its target and has received £850,000 in investments. “We reached our target and had to pull it as we were giving away the equity too cheaply,” said Speight.

On 01 March 2018 Honcho got going again from new offices in Durham, the following month in April 2018 it received formal authorisation from the FCA as an approved intermediary, and in June it became an Associate Member of British Insurance Brokers Association.

It anticipates launching in early 2019, and a Series A funding round towards the end of the first quarter of the year.

Read the previous fintech interviews

The fintech interview: Part 4 Akoni

The fintech interview: Part 3 Wrisk

The fintech interview: Part 2 CreditLadder

The fintech interview: Part 1 Taina Technology

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