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Paul Pester, former CEO of TSB Bank, joins the UK fintech madness by launching the first UK-based social networking app that allows friends and family members to share money.
Sky News has learned that Mr. Pester has teamed up with Anthony Thomson, founder of Metro Bank and Atom Bank, and former CompareTheMarket boss Matthew Donaldson to create Loop, which began beta testing last week.
City sources said Loop has raised a seed funding round from a group of wealthy investors and is now preparing for larger Series A funding due in early 2022.
It is believed that Mr Pester and his co-investors have seen a growing trend of informal exchanges of money among friends and family valued at more than £ 12.5 billion a year in the UK alone.
The trend has increased significantly during the pandemic, with millions of people on vacation and greater job insecurity, while lockdown restrictions made it difficult to meet friends and family.
At the same time, the use of cash has decreased dramatically, with online money transfer services becoming increasingly popular.
Loop’s pitch to investors should be based on the fact that this area of ​​consumer finance is not supported by banks or the wave of app-based neobanks such as Monzo, Starling Bank or Zopa that has emerged over the last decade.
Loop’s rollout will mark Mr. Pester’s most publicly visible commercial venture since leaving TSB in 2018 following an IT crisis that he said left the bank “on its knees”.
A subsequent investigation into the crisis that left millions of customers unable to access their accounts for weeks put the blame on TSB’s board of directors and Spanish mother Banco Sabadell.
Since then, Mr. Pester has been chairman of the advisory board of the Fairer Finance campaign group and has advised private equity groups such as KKR and Pollen Street Capital on investments in the financial services sector.
Mr. Pester, who also ran Virgin Money, is believed to have worked on the development of Loop for about 18 months.
The involvement of Mr. Thomson and Mr. Donaldson creates a team with extensive experience in digital finance companies.
Mr Thomson recently led the sale of 86400, a digital bank he founded in Australia, for nearly £ 120 million.
He was previously responsible for founding Metro Bank, Britain’s first new high street lender in a century, and Atom Bank, one of the first app-only banks.
Mr Donaldson, meanwhile, oversaw the launch of CompareTheMarket, which became one of the UK’s largest price comparison services.
Loop plans to launch nationwide early next year, with the founders confident that the cash participation market presents a significant commercial opportunity.
The app is designed as a social network and is initially aimed at students and young professionals.
Research suggests that a third of the UK population borrows and borrows money from friends and family each year, while city regulators have estimated that up to 6 million adults will be borrowed from friends and family every month during the pandemic.
Consumers who register on the Loop app can create a social network that allows them to easily share money with each other.
An investor said the service would help people avoid overdrafts or get drawn into expensive credit services while reducing social anxiety about paying back money to friends and family.
Industry data suggests that around $ 10 billion at any given point in time.
Banks generate more than £ 2 billion in annual overdraft market profits.
Loop’s exact business model is unclear, although a related party said it could be used free of charge by consumers without charging any interest on borrowing.
Instead, Loop is designed to grow sales by partnering with ecommerce platforms to give users the ability to send friends offers and discount codes when they have borrowed money from them, the person said.
A spokesman for Loop did not want to comment on Sunday.
