In my latest fintech interview meet London based Akoni, a company which offers SMEs a platform that provides functionality normally reserved to large corporate treasury departments.
Read how Akoni’s platform links SMEs to banks and automates the process of finding the most appropriate account to keep their capital. It uses an algorithm that works out what best suits their needs by taking into account when capital is needed as well as the level of risk they want to take.
Despite not having the resources of large corporates SMEs in the finance sector hold millions of pounds on customers money, which they need invest. But while large companies have big treasury management systems, smaller companies rely on a lot of manual processes.
Working as a finance director at a Lloyds insurance broker, which often held up to £50m in client cash, Co-founder and CEO Felicia Meyerowitz Singh, experienced how difficult and time consuming it is for small businesses to find the best place to put cash and then move it.
Meyerowitz Singh said she wanted to offer SMEs the functionality that a large corporate gets from a treasury management system, via an automated and Amazon-like platform.
Insurance brokers, for example, can hold client money for periods ranging from one month to six months. Cash is an asset that needs to be put to work. This means the companies that hold client money need to put it in the highest rate accounts at low risk banks.
Imagine if it all happened automatically through a regulated and trusted platform. That’s what Meyerowitz Singh did. She wondered why there wasn’t Amazon type service to help SMEs find the best banking products for their cash?
But unlike consumers, who can easily plan where to put money and for how long, businesses have complex requirements around when they need cash and how much risk they can take.
“The biggest problem that we had was that we had to go to the banks to find out what they could offer us in terms of interest.” She said staff would have to call around the banks to try and get the best rates. “But because we are a corporate there is more complexity and you have to find all the rates that best suit the liquidity profile.”
“Also we had very specific risk criteria,” she added.
“We would have to gather all the information, and go through the whole process which would take months and then by the time you decide where to put the money there are new offers from the banks.”
Meyerowitz Singh asked around the industry and people said there was nothing to make this easier for mid-sized companies. “Most companies do nothing because it is too much effort,” she said. It also turned out the banks were of little help and were missing out on business as a result.
“I thought this is ridiculous,” she said. “If I am a global multi-national and I have a treasurer and a treasury management system I don’t have this problem. But why is it that they can have a solution and because I am an SME I am almost denied a solution?”
A combination of a financial portfolio and an algorithm seemed the answer to manage where to put the money, she decided. She left her job in an insurance broker to start a family and after a few years, in 2014, Meyerowitz Singh decided to set up her own business to create the service she had imagined.
The overriding drivers were; she did no not want to be trapped in the demanding corporate world, and her insistence that there must be a platform for small companies to give them similar capabilities to the treasury management systems.
She was no techie so she teamed up with Panos Savvas , co founder and CTO, who she had studied her MBA with. He had experience in technology as well as banking
“I told him what I was thinking and how it could work from a legal and regulatory perspective and asked whether a platform would work. He said ‘yes I reckon it would.”
They put a prototype together over a few months which was aimed at investors rather than potential customers. This is because investors were Akoni’s first port of call. A third partner, a former CEO of an investment bank, joined soon after and was the first investor. Other investors followed, most of which come from a financial services background.
At the core of the offering is an engine that collects information from various sources and can automatically act on what it finds.
Akoni got a place in Accenture’s Fintech Lab in 2017. The startup accelerator programme put Akoni into the right ecosystem. “This gave us access to the fintech pipeline and raised our profile. It is hard to quantify but it raised our profile before that nobody knew us.”
In 2017 it also had its minimum viable product which was released for user feedback.
Then after updating the product and getting FCA regulatory approval, which took about 4 months, it approached the banks. After about a year it had signed up 17 banks, including its hub bank Barclays.
Akoni’s platform has Barclays as what is known as the hub bank, which holds funds before they are sent by Akoni to the appropriate account at Barclays or one of the other 16 banks.
Akoni does not hold the money it only moves it. Barclays as the hub bank holds it until it is moved. “As a client you are not exposed to Akoni. You are exposed to Barclays.”
Over 600 SMEs are already using the Akoni platform with about £132m in cash going through the platform
There are three parts to the service, all automated. It personalises for customers after collecting information about them such as financial position and risk requirements; it then offers them the products on the market that match their needs; and then transfers the money to the account. The final part is where the FCA approval is needed.
The service does not end when the money is in an account. As things change in the market customers are automatically prompted if it would be better for them to move the money.
“I liken it to Amazon for none financial services people,” said Meyerowitz Singh. “The first to me you log into Amazon it asks you a bit about yourself and gathers more information as you use the platform and public sources, then as your circumstances change like having a baby it offers you different products, and finally although it does not make the products it delivers them to your door.”
These steps are at the core off our proposition but because we are not delivering videos or broomsticks the way we deliver it is highly regulated. To this end the company is split in two with one part, Akoni Hub, FCA regulated. This has 17 banking partners as partners and offers about 250 financial products. Customers go in chose their products from Akoni’s banking partners and create a portfolio which Akoni delivers it.
Akoni also does the anti-money laundering checks and the customer onboarding process.
Akoni has another business as a tech platform supplier. It sells its product on a white label bases to banks and other financial services companies who sell it on to their own SME customers. This is a business the company is not yet pushing aggressively but will step up activity next year
Akoni has a tech team based in London and gets tech work from an outsourcing service provider in Macedonia.
Read the previous fintech interviews
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