Credit: Koto Enters the UK with a Mobile-First Offer

A new FinTech, Koto, gets ready to enter the UK with what they call a “Stress-free Credit” service.

Goals: aiming for customers with poor or no credit history, typically unable to apply for credit offers. Their offer relies on a prepaid card, alongside two credit products.
- Extra: up to £400, where customers pay £0.25 per day as they use the credit and with a 1% fee applied.
- Spread Facility: up to £1,000 to be paid back over 3 to 24 months, and repayment plans to apply a flat £10 monthly fee.
The prepaid card is free. Cardholders may pay abroad and withdraw cash at no extra cost.

Standing out on the UK market already crowded with challenger banks. To achieve this goal, Koto bets on multiple specifics and levers.
- A neo-bank to focus on credit offers only: Koto isn’t a regular challenger bank with generally featured services. Their e-money account and prepaid card are only meant to support their credit-based core offer. Koto relies on this differentiating feature to withstand competition from local FinTechs, such as Monzo and Starling Bank, as well as to make their model profitable as soon as possible.
- Making room for a conversational and Mobile-First approach: Koto has been exclusively designed for in-app use –which, in their opinion, wouldn’t often be the case amongst credit players in the UK. A conversational module has been added, enabling customers to chat with advisors using WhatsApp or Facebook Messenger.

Koto draws inspiration from Ukraine-born digital bank Monobank which claims 1.7 million customers when they were only launched three years ago. This FinTech meets a specific need as local credit bureaus are reluctant to providing broad access to lending offers.
Even so, their co-founders are hoping to implement a similar model in the UK. This market was selected as the local regulation seems quite flexible when it comes to FinTechs.
Target figures: 1 million customers within 3 years.
Besides, over the past months, credit rates have been increasing with challenger banks as a result from the FCA’s intervention and request for more transparency regarding credit prices. Industry players have, for instance, been asked not to keep labelling overdraft options as regular credit products.

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