Exclusive: ‘Building Ziglu’ – Mark Hipperson, Ziglu and Joanne Dewar, GPS in “The Paytech Magazine”
Ziglu offers accounts that treat crypto like any other currency.Is this what the next wave in financial services looks like? Founder Mark Hipperson talks ‘neo v2.0’ with Joanne Dewar, CEO of GPS
Launching a successful challenger is all about opportunity, means and execution. If your burning desire is to launch a crypto-native neobank in the UK, then all those things might take a little bit longer to come to fruition. But that time has come for Ziglu.
Founded by Mark Hipperson, former chief technology officer and co-founder of Starling Bank, Ziglu is a personal money app, offering an account, card and simple way to buy and sell crypto. Hipperson had kept an eye on crypto developments while building Starling, the UK’s first licensed challenger to offer a current account, but which doesn’t – as yet – include crypto facilities. In fact, few of the first wave of UK challenger banks do. Revolut, Monzo (and N26 before its departure from the UK) have extended some functionality to account holders, but they are a long way from treating it as mainstream.
Ziglu, on the other hand, has developed a truly global account for the digital age, one where users can manage traditional and digital currency all in one place, enjoy competitive and instant cryptocoin exchange services, and will soon be able to use a Mastercard debit card to spend whichever of four currencies Ziglu currently supports – Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH) and Litecoin (LTC). It’s challenging the challengers.
“We all know the big banks have been ripping us off and letting us down for years. Starling Bank tried to fix that and I think we did a pretty good job of changing people’s attitudes… but a lot has changed in the last five years,” says Hipperson in his pitchdeck message to crowdfunders who went on to help Ziglu smash its target raise in a matter of hours in September. It was over-funded, infact, by 500 per cent. Hipperson had clearly caught the zeitgeist.
“We’re a modern financial services challenger that does crypto as well, because that’s what a modern financial services company needs to do,” he says. “I’m not an evangelist for cryptocurrency; all I’m doing is providing a service to people because they’ve asked for it. And I want to try to provide something that doesn’t rip them off.
“We offer the opportunity to simply buy, sell, hold, send, and – soon – spend.”
You could join Ziglu and not buy, sell, hold, send or spend any cryptocurrency. And that’s the point. Crypto should be just another tool in your banking app, like account aggregation or Apple Pay.
Hipperson could have gone anywhere to launch a crypto service – but he chose London. “I genuinely believe London is the best place to be launching anything in terms of fintech. There are a number of reasons,” says Hipperson. “But one is, obviously, regulation here; the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) really do support innovation in the fintech marketplace, and help good businesses going through the licensing process.”
As you’d expect from a former CTO of Starling Bank, Hipperson has done things properly. Ziglu is licensed as an electronic money institution (EMI) by the FCA, and is one of the first digital currency companies to be registered under the UK’s Money Laundering Regulations. Being belt and braces, it has also gone to the trouble of insuring up to £50,000-worth of its users’ crypto assets against hackers, too.
“We think all that sets us apart from the competition right now,” says Hipperson.
It’s been piling on users at a rate of knots – in the summer it was onboarding one every three minutes. So, there’s certainly no shortage of interest. Even the CEO of Ziglu’s payment services provider is captivated by it, actively engaging with crypto for the first time through Ziglu’s app.
“Ziglu’s part of the next generation of neobanks,” says GPS’ Joanne Dewar. “The whole neobank race kicked off in the UK, and therefore we, collectively, as a country, as an industry, have more experience here than elsewhere. Mark is taking all those lessons learnt and building them into a new offering.”
One of those lessons was that, like Starling, you need to own your infrastructure.
“The core of what we are is designed, built and owned by us,” Hipperson explains. “All our application programming interfaces (APIs) integrate with our banking ledger in real time, so whether you’re spending money in Australia on a Ziglu Mastercard, processed by GPS; making a payment or onboarding somewhere in Scotland, that all goes through to our banking ledger in real time. We’re controlling all the events, and all the transactions around that. Because it’s ours, we can change and evolve it. If we want to offer an innovative product or service, we can program that in, and get it to market in weeks; we don’t have to go to a third party.”
His approach runs counter to the bank-in-a-box model promoted by many others in the neo space.
“I’m not saying that’s not the right thing to do for some companies; we’re a tech company, first and foremost, with an FCA licence to allow us to do current account services, and crypto, as well. Others may feel that they can’t build that, and therefore go to a provider to say ‘look, can you give us a head start?’. While they might get to market a little bit quicker, they’ve still got to integrate with all the different systems, to be able to provide cards, payments, know your customer (KYC) and anti-money laundering (AML). But you’re paying for all of those. Every single time you use a third party to be your banking ledger, you’re paying somebody else for that. But when I’m raising money as Ziglu, people know what they’re investing in… the core of what we are is owned.”
There is one area of banking service, however, that it made sense to outsource: payment processing.
“There are a number of brands that are not in financial services themselves… they’ve got an app, they’ve built loyalty and they’re then wanting to move into financial services as a way of enabling those end-customers to be able to do something with that built-up stored value,” says Dewar.
“And for those kinds of players, going to a banking-as-a-service provider makes total sense; it’s never something they’re going to develop the deep expertise in. But if their business is financial services, their options could be limited.
“The card processing piece, though, is quite unique, in that it’s very deep, and the requirements are quite sophisticated. There’s a constant need to upgrade, to keep pace with scheme requirements, where Visa and Mastercard keep creating upgrades, and for good reasons, in terms of, new fields, new chargeback mechanisms, 3-D Secure, etc. And the reality is that you have to have serious scale to make that work if you’re not going to use a third party.”
GPS was embedded in the emerging Ziglu business model from the start.
“We pivoted at the beginning of this year, because in March/April, we realised there was a period of time where people weren’t going to be travelling. So, we decided to push back cards a little bit and brought forward some of the features on crypto, because that’s what people wanted to use. They weren’t using their cards or foreign exchange (FX), so we delayed that, in terms of the roadmap, which allowed us to get something to market,” says Hipperson.
“It’s been almost a ‘perfect storm’, in a negative way, for many banks. They’ve struggled with the environment this year: people they want to lend to not wanting or needing to borrow, others having bad debt, people not using their debit cards so that the interchange rebate is lower than ever – 54 per cent down at its lowest point – no FX, and low interest rates. The fundamental point people are learning from this, is that there needs to be profitability in a business model. I’d like to think we have that innately within ours.”
Right now, of course, interest in crypto is reaching record highs.
“I’m no longer having conversations trying to convince people it’s going mainstream,” says Hipperson, “because people can see it’s going mainstream now, with governments and with major banking companies. Facebook’s been saying it wants to get into it for a while. So we know it’s happening, and people want to know how they can just buy £50 worth, or £100 worth, and hold it alongside their traditional currency.
“It’s called ‘cryptocurrency’, but in reality it has been so damn difficult to use like a currency. So that’s what we are allowing people to do through the card, provided by Jo’s company.”
She believes the challenger bank community should be collectively proud of what it has achieved so far. “It’s raising the bar of expectation,” she says.
But perhaps Ziglu a tad more than most.