This year’s AltFi Lending Summit proved to be a fantastic meet-up of lenders, banks, and industry experts discussing how to bring innovation to the industry in this challenging post-pandemic economic environment. Tuum had the pleasure of not just attending, but also hosting a breakout session with our latest UK-based customer, Fiinu, during which we introduced Fiinu’s innovative overdraft solution and explored why Tuum was the right platform to bring this vision to life.
Fiinu’s Plugin Overdraft is powered by Tuum’s next-generation core banking platform.
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Read on below for a synopsis of the main talking points.
Introducing Fiinu’s Plugin Overdraft®
To kick off the discussion, Marko Sjoblom, founder of Fiinu, was asked to introduce the “first in the world” Plugin Overdraft, which is built using Tuum’s banking core and lending modules. As with all successful innovations, it started with recognising a major pain point.
The pain point
Until four years ago, 62% of consumers in the UK used an unarranged overdraft; today, that number has fallen to just 20%. Following an FCA ruling in 2020, the number of banks willing to offer an overdraft to their customers fell sharply, a problem which has been further compounded by the ongoing cost of living crisis. In turn, this saw the rise of many non-bank lending alternatives which, unfortunately, tend to have a negative effect on a consumer’s credit rating.
The already large demand for credit-building overdraft solutions is only increasing, and yet, the supply has been drastically cut. Clearly, unarranged overdrafts represent a vast and receptive market.
Marko describes Fiinu as a “bank independent technology platform”, that is, they serve all bank customers (although Fiinu themselves are a bank, and open up a bank account for each customer – a necessity to be able to offer overdrafts).
The Plugin Overdraft itself links between the customer’s Fiinu account and their own bank account(s) using open banking, and the customer can then access an overdraft facility as if it were offered by their main bank – an unbundling of the overdraft from the current account (in a similar way to how Wise unbundled international transfers). The Plugin Overdraft is the first of its kind in the world.
Tuum’s problem-solving capabilities
Rivo Uibo, co-founder and COO of Tuum, then introduced Tuum’s next-generation core banking platform, and the problems it can address in the financial services industry. Tuum’s offering serves to bridge the often large disconnect between suppliers (lenders, banking institutions, etc.) and those in need (consumers). In the case of Fiinu, this disconnect is illustrated by the need for consumers to access an unarranged overdraft, and the disconnect of financial institutions not willing to offer these services.
In a wider sense, Tuum slots perfectly in with the new API-first world, a world of connectivity being spurred on by initiatives such as open banking. As Rivo argues, institutions granting external access to their systems put themselves at a competitive advantage and ensure they remain relevant, which is the type of connectivity Tuum’s core banking platform enables.
Why did Fiinu choose Tuum?
Being both listed on the London stock exchange and regulated by the FCA, Fiinu had to be exceptionally careful in their banking platform selection process, and had to present a compelling case to both their investors and regulators. The process itself took two years, with Fiinu testing a number of banking platforms before selecting Tuum as the vendor which best supported their needs.
During their series A funding round, Fiinu entered a sandboxing period with Tuum’s core banking platform, which they used to demonstrate the capabilities of the platform to investors. As a result, Fiinu was able to secure £14m in funding. Ultimately, the decision to choose Tuum rested on the level of trust between the two teams, and the proactive attitudes towards problem solving.
For Tuum, the company was particularly attracted to Fiinu’s unique, impact-driven use case.
What’s next for Fiinu and Tuum
Fiinu’s future plans
Fiinu is currently in a mobilisation period and getting ready to launch, with an external audit set to begin soon. Outside of this, Fiinu cannot reveal too much about their plans as they are a listed company.
Tuum’s future plans
Tuum has its sights on further expanding in London after the recent launch of a new office there. The London location hosts a team of on-site solution engineers as well as business and sales executives.
5 questions to Fiinu
1. Is Fiinu a lender? How does Fiinu deal with bad debt?
Fiinu is a fintech group with a banking licence. It builds technology first and foremost, and has a banking licence allowing it to take deposits and lend the money out – otherwise, it could not offer overdrafts. For bad debt, Fiinu works with a panel of the top three debt collection agencies, as is standard for the industry.
2. Is the Plugin Overdraft portable between bank accounts? Do you offer it to SMEs as well?
Fiinu connects to any bank or e-money account – you simply add your account(s) to your one dedicated Fiinu account. There are no immediate plans to serve SMEs, although the licence is there.
3. How does Fiinu differ from, for example, Drafty?
The major difference between Fiinu and Drafty is that Drafty is a non-bank lending solution, whereas Fiinu has a banking licence. As a result, Fiinu can offer credit-friendly overdraft products, while Drafty offers non-bank lending products. Additionally, Drafty has to source its funding from the private market.
4. What is Fiinu’s distribution strategy? Is it B2C or through intermediaries?
Fiinu’s distribution is straight to the consumer, as it leverages open banking to gain consumer consent. In this sense, Fiinu does not necessarily need the cooperation of the banks – but that’s not to say they will not explore these opportunities at a later stage.
5. Is the 90-day expiration of open banking consent a challenge?
Fiinu utilises variable recurring payments (VRP) which removes the need for re-consent after 90 days. Additionally, when people use the account, it can be deemed as a renewal.
Tuum’s next-generation core banking platform enables fintechs to rapidly develop, test, and launch their financial products and services. Get in touch with us to learn more.