The banking sector has often overlooked the financial needs of those with irregular incomes, poor credit histories or migrant backgrounds, creating a gap in the market for companies to provide accessible and transparent financial solutions.
Virraj Jatania, founder and CEO of a UK-based challenger bank Pockit, outlines its dedication to providing vital financial services to underserved communities in the UK, as well as plans to expand it offerings and customer base in the future.
Tell us more about your company and its offering
Pockit provides vital financial services to more than 900,000 customers in the UK – those whose needs aren’t met by the traditional banking system. Our customers include people with irregular incomes, poor credit profiles and migrants with no address history.
Pockit’s current offering is a digital account with all the services you would expect from a traditional banking service and more, such as direct debits, faster payments, our Income Advance credit product, ‘Fast Track to Credit’ credit builder product, overseas payments, a pre-payment debit card, and a programme of cashback rewards on spending with selected retailers and offers on broadband, phone and TV contracts.
What problem was your company set up to solve?
Over one million adults in the UK are unbanked, and almost eight million people in the UK rely on the limited functionality of basic bank accounts. Worldwide, three to four billion people are financially underserved, including up to 130 million in Europe.
There are too many banks and providers of traditional finance that prefer people with steady incomes and higher deposits. Pockit fills the gap left by these mainstream institutions, who would rather stay where they are comfortable, which inevitably drives financial exclusion amongst the most vulnerable. We feel especially compelled by the fact that there are many millions more facing financial stress in the wake of the cost-of-living crisis and inflation.
Since launch, how has your company evolved?
We’ve spent the past nine years building a robust and truly useful service for our customers. Over the last three years, we have really focused on making our business model more sustainable and commercially viable through a combination of improvements to revenue and reductions in cost to serve. These efforts have put us on a solid footing so that with our growing user base and continued support from investors, we can continue our growth and drive towards profitability.
The solid footing that we are now on means that we can launch new and exciting products that we hope will greatly impact the consumer finance market. For instance, last month, we released our innovative Income Advance product, allowing customers to borrow money without the high interest rates and risks of loan sharks and payday lenders. The service costs a flat £4.99 fee per advance, with no additional interest charged, offering a financially responsible and regulated option for consumers. We are looking to launch other new products in the future that will continue to both meet and exceed our customers’ needs.
What has been the biggest challenge or most ‘tricky moment’ to overcome?
Unfortunately, we were caught up in the collapse of Wirecard back in 2020. They were highly credible and trusted across the sector by the likes of not only us but also Revolut, Monzo, Curve and more. As a result, we were one of a large group that identified their offering as fit-for-purpose for a growing fintech business and the debacle took us all by surprise.
That said, Pockit has learned a lot since Wirecard, specifically the due diligence we carry out on key supply chain partners. This includes us better understanding their financial stability and key policies and, if appropriate, probing about any potential issues with the regulator.
What are your biggest achievements or ‘proudest moment’ so far?
Our biggest achievement has to be the impact that we have made in reshaping the consumer finance market by offering vital services to individuals who are left behind by high-street banks because they have irregular income flows, are on low wages, have poor credit histories or lack housing history because they have recently arrived in the UK.
This was demonstrated in the launch of our Income Advance product. Amid the backdrop of a cost-of-living crisis and reduced availability of credit, we have launched a product that has consistently delivered take-up rates of approximately 50 per cent among our existing customers, strong repayment rates and low default rates. This felt like a vindication of our entire ethos of providing key services responsibly, affordably and sustainably to an underserved market.
We do not want to rest on our laurels; having 900,00 customers is a huge achievement, but we want to continue to grow our customer base and launch innovative new products on our mission of supporting the financially underserved.
How would you describe the culture of your company?
We have a team that are unwaveringly committed to democratising financial inclusion. Empowering the millions of people who have been left behind by traditional financial services is core to our mission. Pockit champions a hard-working culture, which is important to deliver our audacious goals. At the same time there has to be an environment people enjoy being in, so we ensure the hard work is offset by doing things our team members enjoy and having an open door policy across the business.
What’s in store for the future?
One of Pockit’s key plans is to continue to grow its customer base. In the UK alone, 20.2 million people are financially underserved who could really benefit from Pockit’s services, not to mention the benefits Pockit can bring to the many millions more facing financial stress in the wake of the cost-of-living crisis and inflation. So we know the market demand is there.
In addition to growing our customer base, we are broadening our product offering. As well as the recent launch of our Income Advance product, we have an ongoing trial and plan to fully roll out our ‘Fast Track to Credit’ credit builder product, which will help people locked out of the financial system improve their credit scores.
The product involves creating a virtual loan, held in savings, against which the customer pays a monthly sum of £9.99, mirroring a repayment scheme. These repayments are reported to the three major UK credit agencies, Experian, TransUnion and Equifax, in order to assist customers in building their credit profiles. Our credit builder product will build on Pockit’s success in creating a safe, regulated and sustainable route to access a wider range of financial services for our customers.
Beyond this, we are exploring additional products within the lending vertical to help customers manage the cashflow volatility they face in the month and this will be complemented with helping customers to save more through budgeting features, savings accounts, insurance products and more partners on our perks and rewards programme.
