Bringing financial services to the ’unbanked’

The winner of The Spectator Economic Disruptor of the Year Award for 2018, sponsored by Julius Baer, is on a mission to bring financial services to ‘the unbanked’; he still has a mountain to climb, but he believes that if you come up with a product that really solves customers’ problems, profits must surely follow.

“Extremely proud and excited,” is Virraj Jatania’s response to the inevitable how-do-you-feel question after the judging panel chose Pockit, his low-cost, easy-access banking app, as the overall winner among almost 100 entries from across the UK for the Economic Disruptor of the Year Awards. “Even ecstatic, you might say — particularly because the other finalists were all such amazing companies. And it’s great the judges recognised the social purpose of what we’re doing, as well as our business proposition.”

A family of entrepreneurs
The first point to be observed about Virraj Jatania, besides his passion for the Pockit project, is how young he is to be running a banking venture — just 30. But he comes from an impressive stable, with strong family support. His parents were among the thousands of Asians expelled from Uganda in 1972 by President Idi Amin, forced to leave everything they owned behind. They moved to Nigeria and began again in business, then via Dubai and India to the UK. Originally they were distributors of consumer products made by the likes of Unilever and Nestlé, but in due course their company Lornamead began buying up a portfolio of neglected (or ‘orphan’) personal care brands from the multinationals  — Harmony hairspray, Vosene shampoo, Yardley cosmetics — and putting new marketing impetus behind them. Success brought a substantial family fortune.

Virraj graduated from University College London in business studies and began his working life as a trainee at Barclays before joining Lornamead. When the family decided to sell the business sold at the end of 2012 to the Hong Kong-based supply-chain group Li & Fung, he took the opportunity to start developing the concept of Pockit as ‘the world’s most inclusive bank’.

Unbanked and underbanked
That catchphrase reflects Virraj’s belief that financial exclusion exacerbates poverty and social immobility, making it ‘one of the most pervasive social problems of our age’. 

Low-cost digital banking is a crowded field these days, but what’s so disruptive about Pockit is its focus on reaching the lowest-income segments of the population who are least well served by (and if truth be told, of little interest to) the established high street banks.

Pockit’s claim is that its basic current account takes just two minutes to open: it comes with a contactless MasterCard as well as a mobile app, but without prior credit checks, hidden charges or complicated jargon — just a simple, online form and a one-off payment of 99p. The service includes direct debits for paying regular bills, and the ability to send remittances abroad at modest cost. ‘Straight-talking, no-nonsense banking,’ is one of Virraj’s slogans.

Pockit has 500,000 customers so far and is acquiring new ones at the rate of 20,000 per month — through word of mouth, social media and partnerships with recruitment firms that encourage new employees to open accounts to receive wages. Pockit’s target in the UK is to build a customer base of  2.5-3 million within 4 to 5 years, out of a potential total market of 4 or 5 million unbanked or under-served by mainstream banks; and there are ambitions to expand across Europe too.

A meeting of minds
Pockit is backed by the Jatania family as majority shareholders but Virraj completed two early funding rounds, of £1 million and £5 million, that also attracted support from among others Concentric Ventures, the celebrated venture capitalist Jon Moulton and the former Manchester United manager Sir Alex Ferguson. When Virraj was first introduced to Ferguson, they found a meeting of minds: “Given his background and the care he has around working class communities he just loved what we were starting to put together,” Virraj told Business Insider in 2016.

But there’s clearly a substantial ‘burn rate’ of capital for a high-growth venture such as Pockit, which makes such a virtue of its low charging structure. Breakeven is still some distance to the right on the spreadsheet. Is that a concern for Virraj? “Obviously we’re talking all the time to existing investors and potential new ones about raising more capital when we need it. But the most important thing is to offer an efficient banking product that really solves our customers’ problems for them. If we’re sure we’re doing that then I believe we can also be confident that profits will flow in due course.”    

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