Back in 2015, I co-founded a challenger Bank called Starling with a super smart group of people (plus me) with different talents – mine was technology – and with a common drive, determination and goal ‘to change financial services for the better’.
I think we went a long way in achieving that aim, helping people keep on top of their finances, to help them save and manage their money and importantly build a positive relationship with them.
We didn’t want to ‘rip you off’ when you went overdrawn or flog you stuff you didn’t need or want, as we all know that the old banks do daily. I had many years working at Barclays and I learned who comes first in these big banks, and it’s not their customers. Hence the initial arrogance of those banks, “you neo-banks will never get any traction” was first replaced with a desire, and now a need, to compete. Many of them tried, but failed, to launch their own challenger brands: think RBS’s Bo or Nationwide. The result, hundreds of millions of shareholder funds (and customer funds in the case of Nationwide), wasted.
When Starling launched the FCA was keen to support fintechs equipped to make the leap to a Bank, with licences issued to the likes of Atom, Tandem and Oaknorth. Starling, with me as CTO, was the first ever to design, build and launch a proprietary cloud-native (and fully open source) banking platform. That tech remains at the heart of Starling today, giving it a competitive advantage over those sitting on other company’s technology. ‘Legacy’ before they even landed their first customer.
It’s 2020. Everything has changed.
The business models and perceived advantage of becoming a fully regulated UK bank are now understood… and it’s not good is it? Just look at recent results announcements.
Customers didn’t switch from the old incumbents in the numbers forecast, so how can one understand their ability to repay an overdraft or loan with no salary coming in or standing orders and direct debits going out? You can’t.
Accordingly, the new banks can’t lend as much, so their profits aren’t as strong. In a climate of ‘the lowest interest rates ever’, the surplus funds the banks hold with the Bank of England aren’t earning interest. If that wasn’t bad enough – the impact of Covid 19 sends shockwaves across the world. For banks it means an increase in bad debts and, with severely restricted travel, no income from FX or the use of the bank’s debit card. Banks get a small rebate from Mastercard or Visa when their customers use their cards.
So, to my unfinished business
The world has changed a lot in 5 years. Open Banking, PSD2, the movement of digital currencies into the ‘mainstream’ mean choices that were made back then aren’t those we’d make today. Regulation is important to ensure customer money is safe which is why Ziglu has applied for an EMI licence. Unlike banks Ziglu can provide crypto alongside traditional currency plus many all the services that customers love from the ‘challengers’.
Crypto had a poor ‘rep’ from some naysayers, it still does, but the pool is shrinking with each new global bank, government or regulator accepting the inevitability of its place in the monetary landscape. Remember when ‘cloud’ was too risky and insecure to run a production bank on? That was a battle I had in 2015, but I digress.
Importantly for me personally, banks ignore whole sections of our society, the unbanked need access to a simple account but the banks don’t help, usually citing Know Your Customer (KYC) concerns if they don’t have an address. That’s rubbish as you don’t need an address to provide basic banking services, its selfish profiteering and it grates on me.
Crypto will help everyone to gain access to financial services and so will Ziglu. Our launch product will be followed up with further releases to widen the market to include everyone. As it should be.
It doesn’t have to be that way
Remember how much RBS and Nationwide wasted on their aborted challenger brands?
It doesn’t have to be that way; at Ziglu we designed, built and launched a complex banking platform. Our platform has hundreds of real-time (API) integrations internally and externally to exchanges, FX providers, card processors, KYC/AML providers, banks, credit institutions and cold storage providers with a bunch of microservices on the latest cloud native, open-source technology. Our security, resilience, availability and overall service is best in class.
But how are we different?
When a customer downloads Ziglu from the Apple App Store or Google Play customers will get a super slick 3-minute onboarding process, yes, we have timed it. Customers are provided with an account with a UK sort code and account number. We remove the complexity of crypto keys, security and risk and make it simple to buy and sell crypto whether that is £10 or £50,000.
We are the only challenger to offer you £50,000 of free insurance, a better price than anyone else in the UK (test us!), great customer service and a brilliantly designed app that enables you to send any currency you hold instantly to another Ziglu user anywhere. More ways to send and spend money such as a debit card will be added within a matter of weeks.
A modern challenger does traditional currency alongside crypto.
Finally, my five ‘founder’ beliefs
- Always own your own tech.*
- Technology firms are and will continue to change the world for the better – it’s barely started.
- If you believe something hard is impossible you will never start it.
- Luck and timing are important.
- Execution is vital. So many great ideas……such poor execution.
*Caveat – unless it’s a commodity or can be replaced as a best in breed non-material provider.
Mark Hipperson is the Founder and CEO of Ziglu a leading crypto challenger launched in June 2020. He previously co-founded a UK retail bank and two financial technology businesses. He is a commentator and speaker on banking, FinTech, crypto, technology, PSD2 and open banking.
At Starling Bank he was responsible for helping to secure the UK banking licence with regulators and obtaining the initial funding the Bank achieved in December 2015. He was also responsible for the design, build, implementation and support of the Bank’s IT platform, apps and infrastructure.
Mark started his career at Barclays where he was Head of Technology.