Apr 28, 2021

Digital startup Current taps into millennial banking mindset

Current
Digital
Startup
Banking
William Girling
2 min
Current’s latest $220m Series D round has resulted in the digital banking fintech tripling its value from $750m in November to $2.2bn today
Current’s latest $220m Series D round has resulted in the digital banking fintech tripling its value from $750m in November to $2.2bn today...

Established by CEO Stuart Sopp in 2015, Current strives to bring affordability and accessibility to banking for everyone.

It achieves this primarily through the ‘Current Core’ - bespoke technology that imparts greater speed, stability and cost efficiency to the fintech’s community of users. Benefits include:

Challenging the sector

The startup’s Series D was led by VC firm Andreessen Horowitz, which lists tech leaders such as Facebook, Pinterest, and Instagram among its exits.

Current’s acceleration in the US neobank space is bringing it into close proximity with longstanding favourites such as Chime. Speaking with CNBC, Sopp expressed optimism regarding the company’s future and satisfaction with the quality of recent investment.

“We have exceptional investors who have looked at Current deeply and believe that we’re one of the winners in this neobank space.

“We’re here to challenge the existing bank fraternity. Over the next 10 or 20 years, most young adults won’t see branches as a viable alternative to banking — it will be digital only, and they will have to catch up with us.”

Banking on younger customers

Notably, Current’s objective has been to target individuals earning less than $45k per year, with the average customer age being approximately 27.

The inclusivity, ease, and community of challenger banks speaks to a broader feeling that traditional banks aren’t doing enough to maintain younger customers’ business. According to a report from Oliver Wyman:

  • 53% of millennials don’t consider their bank distinctive from others
  • c.30% believe holding a bank account may be unnecessary in the near future
  • 73% would be more excited about a new offering from Google, Paypal, or Square than a release from their own bank

Clearly the alienation exists, and it’s a problem that incumbent banks all over the world must contend with. While they might have longevity and reputation on their side, these things alone won’t be enough to save traditional banking from the more innovative and youthful offerings of Nubank, Starling, Monzo, and other challenger banks.

Image source: Current

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Jun 17, 2021

Zafin: Banking is now in the era of the tech ecosystem

Zafin
Banking
Technology
Digital
3 min
FinTech Magazine holds a Q&A session with John Smith, EVP Ecosystem at Zafin, on the evolution of banking and its future as an aspect of tech ecosystems

The development of tech ecosystems is placing the future of post-COVID banking in jeopardy. At a time when Big Tech can replicate the functions of traditional financial institutions, what can banks do to retain a grip on the market?

John Smith, EVP Ecosystem at Zafin, has a few ideas. A SaaS cloud-native product and pricing platform for financial institutions, Zafin is preparing the next generation of banks to cope with this precise challenge.

Smith is responsible for the strategic and tactical management of the company’s ecosystem, including the creation of new business models to support growth and differentiation. We asked him four questions:  

Q. Have the events of the pandemic caused an irreversible shift in the digitalisation of banks? If so, is COVID the sole cause or are there other factors?

It’s a great question and one that I am asked a lot. Without a doubt, the COVID-19 pandemic has driven a significant shift in the acceleration of digital. In fact, I’ve seen some estimates show there to have been as much as four to six years of digital adoption growth since the initial lockdown started. 

While the pandemic may be the primary reason for this growth, two other drivers include fintech disruption and the high costs of operating a traditional retail bank. Both of these factors have caught the attention of banking executives as they set their minds on accelerating digital transformation with a focus on high return, low risk. 

Q. Some commentators believe banks must learn from Big Tech in order to survive. Do you agree? Please expand. 

I agree completely; we’re living in the era of the ‘ecosystem’. All the seismic shifts we’re seeing in technology, be it aggregation, embedded finance, DeFi or hyper-personalisation are all enabled by the foundation of an ecosystem.  

When financial institutions work with a strategic partner like Zafin, which has made the strategic investments in a best-in-class ecosystem, they’re able to capitalise on opportunities more quickly and safely, and will be better positioned for growth now and at the other side of the pandemic. 

Q. What are currently the obstacles to adopting Open Banking? Is it more likely to 'take off' in some regions rather than others?

I would argue that Open Banking has been in the US for some time and will only continue to grow there. By definition, Open Banking is about the secure sharing of financial information that customers are aware of and have authorised. Under that definition, we’re seeing aspects of this well underway even though its full potential remains to be seen.

Third-Party Providers are a natural outcome of Open Banking, whereby they can create propositions beyond what a bank normally does to enable banking functions such as payments, borrowing, saving and so on. Once again, some of these are already present through industry-led initiatives, whereas regions such as the EU have taken the pathway of regulation such as PSD2.  

The industry-led initiatives we’ve seen in the US have also had the added advantage of guard-rails that regulatory bodies like FFIEC and CFPB provide. There are also other technology-led initiatives such as API definitions that are set out through the FS-ISAC. 

I would argue the future of Open Banking in North America will be through the natural evolution of the guidelines and API definitions that have been published, as well as the natural progression of industry initiatives. 

Q. Are there any other bank tech trends you'd like to discuss? 

Coreless banking. Zafin has been pioneering some of the work around externalising functions out of the legacy core to drive a more ‘fintech nimble’ bank, while not having to deliver a ‘heart and lungs’ core bank replacement. 

Real life examples of this include moving some of the core functions of a banking system, such as product and pricing to a platform like Zafin. Origination, onboarding, KYC, risk, and compliance are all other examples of externalising banking functions for added agility.

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