Former TSB CEO Pester has joined FinTech’s enthusiasm to launch a loop of social networks to share money.Business news

Former TSB Bank CEO Paul Pester has joined the UK fintech frenzy by launching the first UK-based social networking app to allow friends and family to share money. ..

Sky News learned that Pester worked with MetroBank and Atom Bank founder Anthony Thomson, and former Compare The Market chief Matthew Donaldson, to set up Loop, which began beta testing last week.

According to city sources, Loop is raising seed funding from a group of wealthy investors and preparing for a larger Series A financing in early 2022.

It is understood that Mr. Pester and his co-investors have identified an increasing trend in informal money sharing among friends and family worth more than £ 12.5bn a year in the UK alone.

During the pandemic, this trend widened significantly, with millions of people being temporarily dismissed, increasing uncertainty in the job market, and restrictions on blockades making it more difficult to meet friends and family.

At the same time, cash usage has dropped dramatically and online money transfer services have skyrocketed in popularity.

The loop’s marketing to investors is based on the fact that this area of ​​consumer finance is not supported by banks and the wave of app-based neobanks that have emerged over the last decade, such as Monzo, Starling Bank and Zopa. It is said that.

The launch of the loop represents the most publicly visible commercial venture since leaving TSB in 2018 after the IT meltdown that Mr. Pester said he “kneeled” away from the bank.

Subsequent investigations into the crisis, where millions of customers lost access to their accounts for weeks, held the doors of the TSB board and its Spanish parent Banco Sabadell accountable.

Since then, Mr. Pester has chaired the Campaign Group’s Fairer Finance Advisory Board, advising private equity groups such as KKR and Pollen Street Capital on investing in the financial services sector.

Pester, who also ran Virgin Money, is understood to have been working on Loop for about 18 months.

The involvement of Thomson and Donaldson has created a team with extensive experience in digital finance ventures.

Thomson recently presided over the sale of 86400, a digital bank founded in Australia, for nearly £ 120 million.

He was previously responsible for the founding of Metrobank, the first new high street lender in the UK for a century, and Atom Bank, one of the first dedicated app banks.

Meanwhile, Donaldson oversaw the launch of CompareTheMarket, one of the UK’s largest price comparison services.

The loop plans to launch nationwide early next year, and its founders are convinced that there are significant commercial opportunities in the fund-sharing market.

This app is designed as a social network and is initially aimed at students and young professionals.

According to a survey, one-third of the UK’s population lends and borrows money to friends and family each year, but city regulators say that up to 6 million adults borrow from friends and family each month during a pandemic. I presume that there is.

Consumers enrolled in the Loop app will be able to create social networks where they can easily share money with each other.

One investor said the service would help reduce social anxiety about repayment to friends and family by avoiding overdrafts and being drawn into high-value lending services.

According to industry data, there are about £ 10 billion of overdrafts at a time, 30% of which are less than £ 50.

Banks make more than £ 2 billion annually from the overdraft market.

The accuracy of the loop’s business model is unclear, but people close to the business said it was free for consumers to use without charging interest to borrow money.

Instead, Loop is expected to drive revenue by partnering with an e-commerce platform to give users the option to send their friends offers and discount codes in return for borrowing money. ..

A loop spokesman declined to comment on Sunday.

Former TSB CEO Pester has joined FinTech’s enthusiasm to launch a loop of social networks to share money.Business news

Source link Former TSB CEO Pester has joined FinTech’s enthusiasm to launch a loop of social networks to share money.Business news

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