New entrant Ipagoo targets businesses with pan-European current account
London-based Orwell Group, founded in 2005, has launched a pan-European current account. Called Ipagoo, the product will initially be available in the UK, France, Spain and Italy.
Ipagoo allows users to make cross-border transactions, make and receive payments in different currencies and use cash management features. While several large global banks offer services in multiple countries, they operate as separate legal entities in each country. That has a huge impact on the customer, according to Carlos Sanchez, chief executive at Orwell Group.
“If you were based in the UK and you moved to France, for example, you’d have to be onboarded separately in each country,” Sanchez told Banking Technology. “If you end up with different accounts in each country, you can’t manage them all in one place. It becomes very complicated.”
The idea behind Ipagoo is to simplify things. The company exists as a single legal entity, and claims that a customer can sign up in 20 minutes. Having done so, they won’t need to use an additional separate set of details and passwords for each country. Instead they have one login. Accounts have their own IBAN and BICs and can be used to setup direct debits, standing orders, normal payments and to order a debit card. Joint accounts are also available. Like many of the newer companies in financial services such as Holvi and Moven, Ipagoo uses payment services from traditional banks. But Sanchez is keen to emphasise the open architecture aspect of Ipagoo, which he says is used by no other retail bank. He adds that this enables the company to plug various third-party services into Ipagoo – and this is exactly what Orwell Group plans to do. While there are around 8,000 banks in Europe, the average retail customer in the UK for example has access only to a handful. Ipagoo’s ambition is to change that.
“We will become like a supermarket, in the sense that you can come to us and shop for a whole bunch of different financial services, being offered by companies from right across Europe,” he said. “So for example if you spot a German product that looks good, you can have it, even if you are based in another country. If you are in Spain and you feel that you want a French service, you can do that. It opens up a whole new world of choice and competition in Europe.”
Major financial institutions are also beginning to look at using APIs to open their architectures to third party services. RBS’ global transaction services business, for instance, is exploring collaboration with a number of start-up companies as a way of combining its own services with the innovation provided by smaller companies, through API sharing.
The other area in which Orwell says it can differentiate Ipagoo is in cash management. “Traditional banks are focusing on credit and lending and investment, so for them cash management is a necessary evil to attract money in,” said Sanchez. “They have never put enough effort into cash management services. We have developed a lot of services around cash management that banks have never provided before.”
These services include real time cash pooling across Europe 24/7, and conditional payment. For example, an outgoing payment can be conditional on receiving an incoming payment from another party. Users can also ask to see the payment request on their mobile phone so that they can check that it meets the expected amount before they pay. Debit cards can also be linked to any country and changed at any time, for example for a holiday, and the funds will be denominated in the local currency.
Ipagoo has just launched for individuals and plans to launch for businesses in March. The company estimates that individuals and small businesses with international interests would benefit the most, although the company does plan to appeal to as broad a customer base as possible. It estimates that 30 million people within the EU are living in a different EU country than the one they were born in, while 2.5 million move between countries each year. Of the 30 million, about 80% live in the big four countries: UK, France, Germany, Spain and Italy. After the European rollout is complete, the company is also exploring opportunities to launch in Australia, Canada, the US and New Zealand.
“We want to liberate people from traditional banks and provide them with the freedom to choose products and services that suit them,” said Sanchez. “We’re offering a genuine breakthrough in financial services, putting customers in control of their money and liberating them from the challenges of trying to make traditional, static banking products fit their modern international lifestyles. We want to provide a genuinely positive experience of banking for our customers.”