Fintech has seen a flurry of activity of late, with many budding entrepreneurs looking to make use of their previous careers in banking to help shake up the financial sector. Now, a new startup is hoping to transform access to credit for those locked out of the formal credit system – nine million people in the UK.
Norah Prida Bay’s Kitty10 is an app that came about from time spent observing the savings habits of people in Mexico – when she first decided to pursue entrepreneurship, with a considerably less successful venture.
Prida Bay has previously worked for Mexican national bank Banamex, and Citi, after always wanting to work internationally – so plumping for a global institution. In 2009 she returned to Mexico and, after having two children, decided to leave investment banking as she thought becoming her own boss would enable “me to have more time to myself”. She admitted that was a naive thought, and also feels that at that stage, “I was young and arrogant, and thought if I was really good at one thing I’d obviously be really good at something else too”.
Her initial foray into entrepreneurship was a disaster. “I’m a girly girl and came across Shellac for your nails. At the time it hadn’t really taken off in Mexico, so when I went there everyone was amazed with it,” she explained. “I thought I could take the brand there and make it a success.”
To do so, she had to buy the whole brand, which she did using her savings, but it was a very niche and expensive product that just didn’t take off. “It failed completely and it was the nail technicians rather than the salons who have to buy it, so it was ultra expensive and I lost a lot of money,” Prida Bay said.
Left with a huge inventory of products, Prida Bay decided her only option was to get credit and set up a beauty salon. She had to pay her employees in cash and did so every week on the Saturday. Prida Bay soon realised they had set up “an informal savings group”, and she realised it was hugely popular among the lower income segments of the population in Mexico. “Each put £100 in a money pot, then someone takes the £1,000 say at the end of the week, and the whole pot rotates hands each week.”
This meant if one of the women had a birthday coming up, or their car broke down, as Prida Bay used as an example, they could make a case to take the money that week which would help sort out their situation. It also started up a community, so when people saw others involved, they wanted in the club and to be among the gossip of what was going on with people.
Prida Bay noticed inefficiencies with it however, as they were all still carrying the amount of money round as cash. “Someone was robbed on public transport,” she pointed out. It resulted in her creation of Kitty10, as an app to circumvent this and allow people to participate wherever they are. “It allows for people to continue the journey across states, like a WhatsApp that allows you to save,” she explained.
She realised her idea could potentially be a problem-solver for people on a much wider scale, after seeing a World Bank report in 2010 which indicated that 1.5bn people across the world save using such a mechanism, “and it’s called different things across the developing world”. By putting this all in an app, Prida Bay thought she could help users build a credit history “as they couldn’t get that at the bank”, as well as serving as a safe alternative to payday lenders.
She applied to do a Masters at London Business School as she “didn’t have the tech beat”, and hoped to find people from the tech sector to partner with. She’s particularly passionate about choosing the capital as the place to get this grounding in tech and innovation. “London is the heart of fintech and has been exporting it all around the world, it’s amazing,” she said.
Initial stumbling blocks came as banks had her app down as a money transmitter, meaning the likes of Stripe and Paypal wouldn’t partner with her project. Thinking that unless she partnered with a bank and incorporated them one by one into the app her business wouldn’t take off, this seemed a big problem at first.
“I had to get a letter saying I wasn’t so they’d be willing to negotiate,” which helped break down that first barrier. “It had seemed insurmountable at first,” Prida Bay said candidly. “It really is so, so tough initially and I thought there was no way I was going to be able to do this, but you have to keep on going.”
“I had no users or partnerships and was spending my own money or raising money on nothing – it was an unproven concept,” she said.
After finding a tech co-founder she made the Citi hackathon final from 800 applicants and, since partnering with payments platform Stripe, is set to reach its 14 countries with the first wave of the app.
She credits the development of the business to the added element of the contributive side the app brings. “The social component makes em go that extra mile. I have an image of these women in my mind, I know how much they’re struggling,” she explained – reflecting that it puts her initial road bumps into perspective. “Mine are nothing compared to theirs.”
The initial product is very much for women, she stated. “I have been lucky in my career so far and I want to do something especially for women. Obviously, it’s not excluding men, but the truth is I believe it’s for a woman.”
She feels these savings groups are so successful among women colleagues and friends because “they trust each other, there’s that solidarity there”. Prida Bay added that “even women who do have access to credit don’t necessarily go and ask for it”. She believes it’s “not always bad to be in debt, if you can pay it”.
While the fintech sector is both “male-dominated and orientated”, Prida Bay has picked up a great deal of support, and quickly. “My classmates have been incredibly supportive and I raised £150,000 in the first funding round of seed capital,” she said.
The product is now available from the app store, with the payments side usable from August.
In terms of funding, she believes crowdfunding is a great option for new businesses, particularly women entrepreneurs getting in front of the people they need to impress. “It can be a great resource for those don’t have access to funding – even that initial amount, as some have savings or family and friends who chip in, but not everyone does,” she pointed out.
It provides a useful measuring stick to see just how your idea floats among business minds. “It’s a good indication of whether people will buy you service and allows you to prove your concept,” Prida Bay said.
On the subject of funding, there is one warning she has for others looking to make their business idea into a reality – to make sure you’re financially able to take the plunge.
“Nobody likes to say that, but if you’re going to risk it all and you have others depending on you – as I do with my kids – you need that security first,” she advised. “To be an entrepreneur you have to be able to afford it.”
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