Five fintechs to bet your money on
Pulling British banking into the digital age will take effort – and these five startups are on the job, building tools to make it easier to manage your financial life
The startups aiming to make your financial life a whole lot easier.
Fractal Labs
Want a financial assistant but don’t have enough in your bank account to hire one? Fractal Labs has developed an automated helper to assist SMBs manage their cash and find loans, and help banks judge credit applications.
“Fractal connects SMEs’ bank transaction data and accounting data via APIs, on a permission-based basis,” said CEO and founder Nick Heller. “We aggregate key financial data including bank transactions, accounting data, budget data and qualitative signals (through our conversational chatbot interface). We then apply machine intelligence to this data, enabling transaction categorisation, forecasting, financial analysis and credit scoring.” All of that is then pulled into a single platform.
That’s good for firms looking for financing, said Heller, but should also benefit banks by making it cheaper to gather disparate, but key, financial information about a client. The sort of data that’s necessary to assess risk using intelligent analysis tools. In other words, Fractal is effectively “removing friction from the financing market” by greasing it with data.
Fractal launched before Open Banking arrived, but Heller said the additional data has extended what the startup can offer its customers. “In the era of Open Banking, big banks risk becoming a utility that by law needs to give third-party providers access to their clients’ transaction data, if the clients choose so,” explained Heller. “Depending on how the big banks choose to position themselves in the face of innovation, the consequences for individual banks will be defining.”
Fractal is set to hit beta this summer. Find out more at askfractal.com.
Coconut
Freelancers, sole traders and the self-employed have different financial needs than those drawing a regular salary. To help, Coconut has designed a current account just for them, which automatically manages invoices, estimates taxes and tracks expenses.
“We call these businesses ‘personal businesses’,” said CEO Samuel O’Connor, explaining that includes owner-operators as well as microbusinesses up to ten employees. “We think they’re different because there might be an intersection between personal life and business life that’s kind of inextricable.”
And such personal businesses are underserved by existing banks, O’Connor says, with only a quarter contributing to a pension, and many struggling to get a mortgage or business financing. “Open Banking presents a unique opportunity,” said O’Connor. “On one hand, there’s the automation of these day-to-day processes, particularly around bookkeeping such as expenses, tax and getting paid.” Beyond that, Coconut aims to pull together all the details of someone’s finances to help them find financial products such as loans and pensions, or minimise taxes.
Currently, British banks don’t offer enough data to let Coconut accomplish all this, hence the requirement to set
up a bank account with the startup. But Open Banking helps give it a wider picture of your financial situation, as some business expenses might sit outside your company account. “One example might be the working from home allowance, where you can expense a portion of your rent or mortgage, and that will probably sit in your personal bank account,” he said.
Coconut opened an iPhone-based beta for sole traders in January, with an Android version in the works. Find out more at getcoconut.com.
Countingup
Bookkeeping isn’t the reason anyone gets into their job (unless you’re an accountant), so Countingup aims to make it easier by bringing banking and accounting into a single tool. Like other finance startups, it didn’t wait for Open Banking to get started, instead offering a business current account with plenty of SMB-friendly features, such as speedy signups and instant transaction notifications, and pulling in data from other sources to automate your bookkeeping.
“As well as offering banking, we also offer a built-in accountancy solution – something no bank currently has. Financial reports like profit and loss get automatically populated at the point of transaction, saving time and hassle while also ensuring accuracy,” said founder and CEO Tim Fouracre.
The Open Banking changes aren’t necessary for Countingup to offer its service. Rather than rely on a limited API, it works with a third-party banking provider to offer current accounts, so it gets a fuller view of customer data. That said, Open Banking will let the startup extend its services in the future. “Access to our accounting and banking data could provide an easier way for small businesses to get access to capital, for example, from lenders,” he said.
Countingup is available now. For more information, head to countingup.com.
Fluidly
Fluidly aims to be your business’ autopilot via real-time cash flow forecasting, so you know exactly what to expect with your finances.
“Banks and accounting data tell you what has happened in the past, but Fluidly gives insight into what is coming up – whether that’s ensuring a business has funds to make payroll or their tax bill, or helping them get paid faster and more reliability by dynamic cash flow management,” said CEO Caroline Plumb OBE.
Fluidly gathers data from your accounting software before cleaning and categorising it to use in its AI-based modelling tools. Open Banking’s data APIs mean it will be able to boost its forecasts. “Our forecasting uses machine learning techniques to predict what will happen in the future… the more information about what has happened historically, and what is happening now for a business, the better,” said Plumb.
Plumb expects banks to evolve to become platforms. “They’ll aim to be the key partner or hub for a relationship and supplement this with multiple specialised providers who can broaden their range of services.”
Fluidly is available now. For more details, go to fluidly.com.
Starling Bank
This London-based, mobile-only bank launched its first current accounts in May 2017 with business accounts following in March 2018. SMBs can sign up in fewer than five minutes from their smartphone, and export all their transactions directly to their accounting software.
Naturally for a digital-first bank, Starling is well ahead on the various regulations. “Starling were the first bank in the UK to release a suite of tools [APIs] to allow third parties to get their ideas off the ground, releasing an in-app marketplace which allows Starling customers to enhance their experience with apps and services from experts in their areas,” said Alexandra Frean, head of corporate affairs.
Plus, it means the mobile bank can constantly add new features. “What makes Starling stand out is that, unlike any of the big banks, we are entirely situated in the cloud,” she said. “We are essentially a technology company that has banking as a product. So, for us, that means that technology and implementation of technology run throughout the entire company rather than acting as a support function to the business.”
Which is why Starling isn’t worried about taking on the giants. “The big banks know they can’t afford to ignore [mobile banking] and that they will have to undergo a massive digital transformation to provide the kind of mobile services that many customers now expect,” Frean claimed. “They are watching very closely what we do and copying some of it. But they are struggling to keep up with what we and other fintechs are doing. Their problem is that they are encumbered with outmoded legacy IT systems, whereas we built our own technology from scratch.”
Find out more about Starling Bank at starlingbank.com.