koto is the UK’s first “challenger lender” – a credit provider built on e-money. We are an FCA authorised credit provider and our goal is to serve the UK’s 12 million (and growing) creditworthy “near-prime” consumers, who have fewer credit options to meet their financial needs, and none with the levels of functionality and flexibility offered by popular neo-banks. Our low, fixed and easy-to-understand fee structure takes the fear out of credit alongside an enjoyable, totally mobile experience.
We are able to lend to a wider range of consumers by using unique credit risk modelling capabilities, proven by a digital bank I founded, monobank and its 3 million customers in Ukraine, and adapted and developed further for the UK market. Koto’s “hybrid scoring” utilises traditional credit scoring from Experian Delphi alongside our proprietary machine learning modules, which take a closer look at individual customers to assess their eligibility for credit and whether this credit is affordable.
Our customers can use a virtual card to make purchases wherever Mastercard is accepted. Underpinned by a smart mobile app that helps people track their spending, we have two credit offerings, both of which come with transparent, fixed fees:
Extra acts like a buffer, providing up to £400 of credit for a fixed fee of 20p per day.
Spread gives customers the ability to distribute larger purchases of up to £1,000 over up to 12 months for a fixed fee of £10 per month. This model of structured credit has been developed to prevent the cost of credit from spiralling, with time to repay limited to a year.
Finally, koto is purely app-based, where its mascot, the koto cat, makes monitoring cash flow and applying for credit stress-free and accessible. Koto strives to be wholly community-driven, using our access to a large team of developers to build new features as requested by users with initial special features including:
Industry-leading onboarding process – customers can be up and running with koto’s virtual card in 7minutes and can have access to credit in less than 10 minutes , while other near-prime lenders’ onboarding processes usually take from 5-14 days.
The entire experience takes place within the app, which is also more secure than traditional applications.
Digital wallet – koto is the only near-prime credit product which can be added to Apple Pay and Google Pay.
Shake to pay – shaking a mobile device near another device in order to facilitate a cash transfer, this cool feature can be used for sending money to friends and even tipping waitstaff without having to enter in their bank details
Spending tracker ensuring users never lose track of their spending or what they owe; koto gives users a breakdown on how they are spending their credit as well as the outgoings of their E-Moneyaccount.
How did you come up with the idea for the company?
After successfully founding Ukraine’s first digital bank Monobank I was keen to start up another business but the lack of international investment into Ukraine around 2017 to 2019 made me realise I needed to go to a bigger market. The UK, with the appeal of a language I was fluent in, a clear regulatory system and an appetite for fintech was the obvious choice. I bought a one-way ticket to London without knowing what the new venture would be – all I knew was the UK was the right place to do it.
The inspiration then to create Koto was two-fold. The first factor was my own experience of not being able to open a bank account and access other services such as a mobile phone contract in the UK because of a lack of credit history when I first arrived. The second was an FCA report that outlined the size of the near-prime credit market in the UK – 12 million creditworthy people in the UK face similar problems accessing credit and are excluded by mainstream lenders.
The market also has striking similarity with the credit market in the Ukraine – an area I know well! These experiences made me and the team quickly realise that there was an urgent need for a service that supported the near-prime market in a responsible way.
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What advice would you give to other aspiring entrepreneurs?
Keep your head down, keep focused on your goal. Especially in current circumstances look for anything positive in your business and multiply it. Stay strong and provide support for your team!
What can we hope to see from Koto in the future?
We’ve just raised £1.3M in funding and we’ll be using this cash to acquire our first 50,000 users, train up our AI credit risk systems, expand operational capacity, refine our UK marketing, and grow our team. We want to scale very quickly! We also have some exciting product updates which we’ll be announcing in the New Year, so watch this space.