Many British and European fintechs have attempted to enter the US marketplace over the past couple of years, only to discover the environment is simply not compatible with their offerings. Monzo withdrew its US banking license application in October 2021, while Revolut and N26 retreated back to Europe following their foray into fintech across the Atlantic.
Sokin is the latest UK fintech to embark on a mission to corner the US customer and make headway into fintech’s strongest market globally. We caught up with Vroon Modgill, CEO and founder of one of the UK’s leading payments companies.
Launched only in 2019, Sokin’s stratospheric success and skyrocketing growth over the past three years have been guided by the acute business acumen of its founder. UK-born Modgill, who has a background in payments, was inspired to set up his money transfer company after seeing the expense and struggles his father faced when he needed to send cash back to his native home of India.
“He used to use very well-known money transfer methods to send money to India,” Modgill explains, “And the problem was apparent. You know, the guy had six apps, he had to do compliance checks every time he was using one particular sort of money transfer method that he'd been using for 20 or 30 years. And it became quite clear that there needed to be a solution to make this easier and less laborious for the recipient as well as the sender.”
Innovative payment solutions and offerings
So, Modgill set up Sokin, a payments transfer system that enables users to send money anywhere in the world, as well as open an account for the recipient on the other side. The second issue Modgil wanted to address was the unnecessarily high fees that money transfer agencies have traditionally charged. He explains, “I adopted the method of Spotify payments building on the subscription model. We're in a subscription atmosphere right now where everyone prefers to pay one monthly fee for things like Netflix and Spotify.”
The move proved to be a canny one, and combined with the KYC AML methods on the recipient side, has resulted in a fintech service that embodies the philosophy of the industry, namely, Sokin offers a streamlined, simplified service that is transparent in charges, easy to use and caters to the customer in that the deliverables – the money – can be transferred anywhere globally, almost instantly.
He explains, “If you were to send money to India now, you would send a link to the recipient in India, they would sign up to Sokin's app, they would go through KYC AML, they would receive a local account and they would receive that money instantly. There's no delay. We're quicker than any money transfer method out there, even some cryptocurrencies to be honest. And we're satisfied with the checks that are done.”
Sokin’s global growth strategy
It was this dynamic way of thinking that has seen Sokin’s success take off so dramatically, that the company is now making headway in the US marketplace. The consumer app only launched about five months ago, but Sokin is already live in about 33 countries and is growing at a pace that's faster than any other fintech globally.
“The ambition is to be in 85 countries by the end of 2022. I think by mid-year, we'll have the biggest footprint than any other fintech as well.”
Despite the speed at which Sokin has grown, Modgill says he has thought long and hard about his strategy. “Although we established the company in 2019, I didn't want to rush to market. I didn't want to be one of those fintechs that serves a small majority of countries in Europe and then kind of builds a name and then builds it out. I wanted us to come in with a bit of a bang.”
The pandemic year of 2020 delayed a few things, he admits but it also allowed the team to focus on their product and global infrastructure. Modgill is certain the company’s entry into the US marketplace will continue to be successful because it addresses universal problems – especially for migrant workers – an issue he is passionate about solving.
“Everyone's facing the same problem,” he says. “What about Latinos that are working in the US that are sending money to South America in US dollars? There's currency issues. They don't know what they're paying. Legacy banks are charging so much with percentage fees and additional fees on top of that. These are migrants working for pennies and yet they have to pay so much. So for me, when I go into each market, whether it's US, whether it's Africa, whether it's South America, it's the same thing. I'm going to address the market, which is that migrant, immigrant market.”
Sokin accounts enable streamlined, currency compatible payments
Modgill says Sokin’s aim is to provide accounts that can be used for a variety of payment services, from transferring cash abroad to helping with the travel corridors once COVID restrictions relax. He explains, “You can come to Europe, and you can convert to Euros. You can use the cards as you would a Euro card. You can go to Dubai, you can use it as a Dirham card and keep that sort of flexibility open. So that this app doesn't just apply to migrant immigrant workers. It’s convenient for everyone.”
Regardless of these attributes, the US market is a tough nut to crack, with incumbents closing ranks, difficulties with licensing, and more. But Modgill believes he has it covered. “We need to stick to our goals. I believe some fintechs have rushed into a lot of global markets because they have had to justify their launches because of the significant fundraises that they all received. Quite often, you would hear about a US$200-300mn raise followed a week later by the news, ‘We are entering X market.’ And then you don't see anything for a while because of bad research, bad planning. This is two years in the making, so we know exactly the markets we're going into. We know the regulatory environment and the goal is to provide an international global currency account for individuals. I think if we stick to that goal, we'll be very successful.”
Sokin’s success in the US marketplace
Modgill says the response they’ve already had from US customers is indicative of the success they will achieve once fully established state-side. “You can see a lot of businesses signing up at the moment in North America to Sokin, because they don't want to pay the legacy fees that they're paying at the moment with their banks. And we can offer a lot more than others because our footprint is so big. So whether it's Latino businesses, whether it's Asia businesses operating in the US that just require a simple account with lots of currencies in them that they can move money around, we are that solution. I'm pretty confident in the planning and research that we've done to make this launch successful.”
The difference between Sokin and others that have tried and failed, is the offering Sokin provides, which is a unique service and not one that is directly competitive to any model currently in existence. “You've got the digital players that can do what they do in the US but can't do anything in Brazil and can't do anything in Asia or Europe,” Modgill points out, highlighting the fact that Sokin’s global network is its ultimate strength. “We are doing something different. We're making money transfers, payments, instant. We're creating a community, a network.”
A fintech seachange in the US market
However, it's not just about offering something unique – or service that appeals to international travelers and migrant workers. Modgill also predicts that many changes look set to happen in the US marketplace over the next few months that may make it a more inviting place for other global fintechs to establish themselves there. But, he also thinks that surprisingly, the US market is also behind the UK in some respects. “I still think it's quite far behind UK and Europe, in terms of the number of digital players that are there. I think what makes a regulatory challenge is the number of states that you have to do business in, in the US. So you have to work with partners that know the area, know the country well so that they can. When we partner up with companies over there, they can provide us with the right guidance. Luckily this is not the first card programme that I'm doing in the US. So I know it pretty well.”
Modgill also believes in taking Sokin as far as he can take it – which means it is in every country on the globe. Entering the North American market is simply the next step in this ambitious strategy. “I think a lot of the other European fintechs mindset is mainly UK, Europe, US, Singapore. And if you speak to any of the crypto players, then they'll go into Japan as well. That seems to be their footprint, which deems them global. When I started this, I wanted it to truly be global. What does that mean? That means that I'm in every continent, I'm providing an account to every single person that I possibly can get to. For me, it is a vast marketplace.”
The remittance aspect is another big attraction for him. “I go into countries where I see that sort of remittance corridors, and the sort of people moving money because that screams out to me that they're probably getting screwed somewhere on fees, especially the emerging markets where there's legacy issues, legacy bank systems that they've been built on, which are typically being charged fees at a very high level.”
Sporting sponsorships for Sokin
Not only is Modgill determined to break into hard-won markets, but he’s also got a strategy to bring his services to a wide audience of customers not necessarily associated with the finserve market. Right now, the company is an official sponsor of football clubs Arsenal, Everton, Fulham, AS Monaco, and more recently, the famous Miami Dolphins. The reason for this, Modgill says, is to reach new audiences and demographics. He also believes sport is a universal language – and a bridge to wider communities.
“I think the story behind the Miami Dolphins is the huge following that they have in that migrant community, especially the South American community, which is something that we identified. Sports generally do bridge that cultural divide. I remember when my dad used to work 16, 17 hours, come back, and the first thing he used to do was have a pint and watch football. And you could see that this is what most people do in our community. Sokin partners up with these sports clubs in two ways. The first way gets our brand awareness out there with five football clubs that can amplify the message globally because it is the most-watched sport.
“The second factor is that Sokin provides a service to those clubs because it has a business account that they use. The partnership with Dolphins, therefore, offers Sokin a presence in a new market that takes it to a suitable demographic.”
Sokin is also working on an initiative called Money Goals through the Miami Dolphins account. The programme is aimed at helping less affluent communities gain a better understanding of saving money and making sensible spending. “We want to support the local communities as well. And this is why Everton, Arsenal, Miami Dolphins, all of them share a very similar message that is ingrained within Sokin.”
Next-generation finserve and incumbents
Ultimately though, Modgill believes that US banks need to develop an openness to change and development, that may not be seen for another decade. “I think in the US, we're seeing what we saw in UK Europe probably five, 10 years ago, where people were still a bit wary about what was going on, and now you can see how open banking is sort of transitioning across UK Europe.
I'm not here to make a statement saying we're here to beat the banks. We're here to work with them. We provide service to a new age, a new era that likes mobile apps, that likes the openness and transparency that legacy banks can't provide.”
He adds, “But I think in reality, what we'd like to do is stay on the track of providing a global currency account to all individuals around the world and sort of making a payments network and a payments ecosystem that makes it easy. Whether you are in Asia and you want to buy retail goods online from someone in UK Europe, you don't have to worry about currency issues. The business doesn't have to worry about currency issues. The consumer doesn't have to worry about currency issues. You can feel free and buy something in Singapore dollars or whatever currency it may be. So I think we want to keep that open transparency and just make things simple for everyone.”