Fronted launches on Yobota's core banking platform
The startup, which launched just over a year ago, helps renters with their deposits when they sign new tenancy agreements. The fintech lends the deposit amount in its entirety, enabling customers to pay back the amount in manageable chunks without incurring fees.
The company, which was created by Jamie Campbell, Simon Vans-Colina and Anthony Mann all former tech-whizz employees at Bud, Monzo and Apple, respectively, has seen much success during its first year of operation because it can lend far more cheaply than other, current options.
The partnership with Yobota, which was founded in 2016, will enable Fronted to expand on its features and improve its product offerings.
The agile architecture and expressive Application Programming Interfaces (APIs) provided by Yobota have helped Fronted develop an exclusive service while concentrating on customer experience and simplicity. The partnership also means Fronted can keep on enhancing its products, adjusting them to suit market changes.
A well-respected fintech, Yobota manages multiple brands for Chetwood Financial, one of the UK's challenger banks. This means it is a tried and tested solution in a highly regulated environment.
Tough rental market
Fronted's goal is to assist renters in affording expensive deposits when signing new tenancy agreements. Data shows that many UK adults simply don't have enough savings put aside to pay deposits when moving into a new rental property.
Fronted's solution is to provide a fixed 12.5% loan to cover the deposit, with renters able to spread the cost across up to 12 months.
, said at the fintech's launch, "Renting sucks — anyone who rents knows it. There are so many problems to solve and we intend to tackle them all bit by bit. But first, we are going to pay people's rent deposits for them so they can pay us back in bite-size manageable amounts. Deposits are a large upfront expense and most people either use mum and dad to sort it out or stay where they are (in the worst cases they do to pay-day lenders)."
He explained, "There are customers of ours that will be in 'hidden households' unable to move because of the upfront fees… Deposits can [also] sometimes take a long time to be returned from the schemes (something the government recently launched an enquiry into). Fronted wants to serve people who might otherwise be 'double-exposed' by deposits. We hope this first product increases social mobility by providing liquidity when people need it."
Commenting on the new Yobota collaboration, he said, "The flexibility offered by Yobota's architecture enabled us to create an innovative and tech-driven solution to a long-standing problem in the UK rental market. By utilising Yobota's APIs, we were able to build a customised user experience that reduces the time and complexity involved in applying for a rent deposit."
By reducing the time to market, cost and complexity of products, Yobota lowers risk and allows fintechs to have a more agile and responsive approach when creating new products and services.
, CEO of Yobota, explained, "It is great to see Fronted launch to market - they are addressing a major societal issue, by helping renters get easier access to homes, with the potential of building their credit scores at the same time. We're proud to be powering another innovative company in the UK.
He added, "The launch of Fronted is an important step for Yobota, too. We've demonstrated that our APIs can be used to build a wide variety of customer experiences, while putting our clients in the driving seat."
Zafin: Banking is now in the era of the tech ecosystem
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.