Welcome to the series where I look at interesting FinTech companies and apps that we’ve seen over the course of the last month.
This will form the basis of a fortnightly post, so stay tuned for 6 new FinTech companies per month. Often, with some analysis on their disruptive capability and funding situation.
Sub-sector: Credit Cards and consumer debt
Elfin Market is looking to disrupt the market for consumer credit cards. They have orchestrated a peer-to-peer platform, whereby they connect those willing to lend with those wanting to borrow. The disruption comes in the form of their interest rates offered. A representative 5.8% APR is an impressive 75% discount to the average APR offered by market incumbents. They offer a simple 4-stage process:
- Fill in the application – This takes just a few minutes, and our decision is instantaneous.
- Get your credit limit – The Elfin Purse comes with a credit limit, which is the maximum amount you can borrow on the platform.
- Withdraw funds – Draw down from your Elfin Purse whenever you need. You’ll receive the funds on your bank account.
- Repay monthly – Repay your Elfin Purse balance through monthly installments, or ahead of schedule to save interest.
This is a really interesting sector to disrupt. It is dominated by the large high-street banks and specialist credit lenders American Express and Capital One. The latter of which leveraging loyalty schemes and offers to keep people tied in. Whilst Elfin do not currently offer any additional features, they are currently developing a physical card (with Mastercard) and a mobile app.
Lastly, it is worth mentioning that they are currently fundraising on Seedrs (probably for the aforementioned product developments) and you could review their investment proposal here.
Sub-sector: Private banking
220, named after the traditional private banking policy of 2 and 20 commission structures, is (we believe) the first company to target the digital private banking market.
Private banking is the illusive area of finance for which High Net Worth Individuals (HNWIs) and families will bank with a trusted advisor for privacy, advice and specialist treatment. We are intrigued to see how 220 are going to address these areas, specifically the last feature – which is arguably the most noticeable offerings of the Swiss Private Banks and Coutts (the UK equivalent).
It wouldn’t be rational to expect 220 to convince users of Julius Baer or Coutts to switch accounts immediately to 220. However, areas which we believe they could make a meaningful and material market grab is Influencers and Inheritors.
- Influencers – kids (literal kids) are making £millions through their YouTube and Instagram accounts. This is literally unchartered territory and is only going in one direction. E-sports, Vlogging and the way artists/performers are being picked up is a trend which will only produce more wealthy influencers. Given that 220 has an e-sports gamer within it’s ranks, this could be exciting.
- Inheritors – insert a consultancy report on the amount of wealth that is going to be passed down in the next generation. Simple maths of baby boomers + stupidly large equity bull markets + property bull markets = Inheritance and ‘The Great Wealth Transfer’ is another market case for the team at 220.
As far as we are aware, they have done their fundraising and are in product development. Having set up in Cardiff, we reckon they may of benefited from very generous government start-up grants and initiatives. The cards will also be using Mastercard.
Sub-sector: Investing made simple
Wombat invest are looking to make investing simple and accessible for all. Whilst they are not the first to move in this area (Moneybox arguably being the first-mover), Wombat appear to have a superior offering in the Aesthetic and Ease of Use.
Fees: Free to trade up to £1,000 in your personal investment account with unlimited trades and education. Subscription with balances over £1,000 cost just £1 per month and 0.45% per year (ETF provider fees apply). Fees appear very competitive and viewed trough the lens that this will be competing with your traditional investing portal (think Hargreaves Lansdown or Halifax Share Dealing Account), it is incredibly competitive. We’d have to do the numbers on investing large amounts.
The offering is definitely about aesthetic, it would be unfair to compare the offering to the ultimate ETF provider – Vanguard or Fidelity – as they do not have any of the following features:
- Apps for UK audience
- Innovative grouping of investment thesis
- Free investing up to a cap
I think the market grab for Wombat Invest would be the education piece. This appears to be a product for those who don’t currently invest and have a knowledge gap, the app seems informative and perfect for those looking to get more out of their money.
Now, given the time of writing (March 2020) is seeing a huge market crash as a response to the outbreak of Coronavirus, this is an interesting time to see how new companies survive their youthful years. Stereotypically, FinTech startups are not profitable for a number of years, with a lot of trust placed in them by investors, often with multiple funding rounds to drive growth.
As this is the first time I’m writing on the topic, it will be interesting to see how the market for FinTech startups develops.
Stay tuned for this new series
Finally, if this is the first time reading our site, we have a few core aims:
1) We want to share knowledge around personal finance
2) We would like to help people save and invest, ideally showing wealth creation to a new audience
3) We want to provide tips and hacks to help with your daily finances
4) We want to have fun doing it
J: I enjoy writing about FinTech, Apps and Neobanks. Hence, I’ve decided to start a series that will round up, twice a month, new companies that I’ve come across. Then, I shall write a much bigger piece (potentially an interview) with my favourite company of the month and keep track of how they progress on their growth story.
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