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This week we caught up with Marko Sjoblom, the Founder and CEO of Fiinu, the company on a mission to utilise technologies to build a new customer-centric bank. Fiinu is currently in the process of becoming authorised by the Bank of England to become a digital bank.
Can you tell us a bit about how Fiinu came about?
I had the initial vision to set up a bank about 10 years ago, whilst I was setting up MyJar, the Deloitte Global Fast 500 overdraft-style lending business in the UK. More recently, about 2 years ago, I went through a Bank of England process with a Family Office, during which I learnt how to secure a banking license. After that, the time felt right to bring my idea to life.
There has already been quite a lot of disruption in the banking sector recently, how do you set yourselves apart?
There are fundamental differences between each of us, and we do have some minor similarities with Monzo and Revolut. There are however three things that we are aiming to do that will really distinguish Fiinu from all of our challenger bank competitors:
- Lend to underbanked consumers without credit agency data;
- Use of a fully automated lending robot, allowing us to operate cost effectively; and
- Improve the credit files of millions of customers.
What opportunity did you see in the overdraft market?
Despite many heralding some of the big UK retail banks “abolishing unarranged overdraft fees” as some sort of success, in reality the banks did not solve any problem.
Instead, they just created another failure. The big banks are just rejecting the transactions that take personal accounts into an overdraft, even though the need for credit remains. The more that the incumbent banks follow this process, the more there will be vulnerable customers in a situation where the need to resort to payday lending, which creates a whole host of other problems.
According to BBC’s Newsnight, a payday loan is a “risk to mortgage applications” because nearly two-thirds of the applications are being instantly declined if the applicant’s credit file includes just a single payday loan. Just applying for a payday loan immediate drops credit scores by between -4.7% and -10% within 12 months, which helps nobody.
Fiinu can solve this paradox and we’re able to serve a huge portion of society in a fair and transparent way, because our overdraft system actually improves our customer’s credit files.
The FCA and several academic journals have researched the area of restricted access to credit and implications are severe. The compelling evidence concludes that restricting access, even to expensive credit, deteriorates the overall financial condition of households. Essentially, restricted access is harming, not helping, the average consumer.
How have you found the experience of applying for a banking licence?
I remember the ClearBank Chairman Nick Odgen saying at a Bank of England seminar couple of weeks ago that their application weighed 13 kilos! Similarly, Atom Bank’s former Chairman Anthony Thomson told me that their application was about 4,000 pages – so it is a demanding, rigorous process. That being said, we are incredibly grateful to the Bank of England; they have a lot of very talented, helpful people that have been working with us for over a year now. They have already dedicated two case officers to us and created a supervision email, and we are confident that our relationship with them is robust and our application will be approved when it’s ready, but it takes time. Our business plan alone is about 600-pages!
What’s the best part about being an entrepreneur?
I agree with what Elon Musk said about one of the best things for him; if you want to have a future where you’re expecting things to be better then as an entrepreneur you can actually make these things happen.
Why are you raising capital through crowdfunding?
I think crowdfunding works really well for a company like ours where we want to engage, and stay engaged, with our community. We would like to have a community of thousands of people who have some skin in the game so they’re partners in the business, and can thus give us constructive feedback and drive our growth over the coming years.
Where would you like to see Fiinu in a year’s time?
Within 12 months we are aiming to be accept our first customers as a bank within the UK.
If you’d like to ask Marko your own questions, you can do so via the discussion forum on the campaign page, where you can also find out more about how Fiinu will be bringing their product to market. Fiinu’ campaign is due to remain open until early-April.
Investing in startups involves risks, including loss of capital, illiquidity, lack of dividends and dilution, and it should be done only as part of a diversified portfolio. This blog post has been approved as a financial promotion by Seedrs Limited.