Latest news with #Zilch
Forbes
3 days ago
- Business
- Forbes
The Golden Age Of Tech-Enabled Consumer Credit
The numbers tell a story that traditional lenders should find deeply unsettling. London based Zilch's credit revenue soared 96% to £75.7 million. Chime's platform-related revenue, primarily from credit products, surged 113% to $162 million in Q2 2025. Two companies, two continents, one undeniable truth: consumer credit is experiencing a fintech-powered renaissance. This boom isn't happening in a vacuum. The New York Fed's latest data shows aggregate household debt increased by $185 billion in Q2 2025, reaching $18.39 trillion. But here's the fascinating part: while traditional credit metrics show stress, with 4.4% of outstanding debt in some stage of delinquency, fintech lenders are thriving. The divergence suggests they've cracked a code that incumbents haven't. Why Americans Are Desperate for New Credit Options The surge in consumer credit demand isn't just anecdotal. Google search interest for "personal loan" has hit record highs in the United States, reflecting a fundamental shift in how Americans think about borrowing. This spike coincides with several converging factors that make tech-enabled credit particularly attractive right now. First, there's the student loan crisis creating a backdrop of financial stress. The New York Fed reports that 10.2% of aggregate student debt was 90+ days delinquent in Q2 2025, with missed federal student loan payments now appearing on credit reports after a nearly 5-year pandemic pause. This resumption of reporting has pushed millions of younger, digitally native Americans to seek alternative credit sources, particularly those with more transparent terms than traditional products. Second, the data advantage of fintech lenders has never been more pronounced. Zilch processes £1.9 billion in gross merchandise value annually, while Chime sees $32.4 billion in purchase volume quarterly. This real-time transaction data enables underwriting decisions that traditional FICO scores simply can't match. The Price Transparency Revolution What's remarkable about both Zilch and Chime is how they've transformed the relationship between lenders and borrowers. Zilch claims to saved UK customers £750 million in fees and interest. Chime's SpotMe feature has customers voluntarily tipping their bank for overdraft protection. In an industry built on hidden fees and compound interest traps, transparent pricing has become a strong selling point. The numbers validate this approach. Zilch's annual spend per active customer jumped 27% to £2,369. Chime's average revenue per active member grew 12% to $245. When customers trust you enough to consolidate their financial lives, expanding into credit becomes natural evolution, not predatory behavior. Is AI Actually Doing Something This Time? Both companies are claiming to leverage artificial intelligence in ways that would have seemed impossible just years ago. Zilch's supposedly AI-driven workflows maintain flat customer service costs despite rising volumes. Similarly, Chime's GenAI voicebot is supposed to have doubled satisfaction scores compared to legacy systems. When AI can handle thousands of support agents' worth of work, the economics of small-dollar lending suddenly make sense. This operational leverage is crucial. Traditional banks struggle to profitably serve customers who need small loans. Their cost structures demand larger loans with longer terms and higher rates. But when your customer acquisition cost is falling (Chime's dropped from 10.6% to 8.9% of revenue) and your service costs are flat, you can profitably serve segments banks ignore. A Macro Convergence In FinTech The most intriguing aspect of this story is how these companies are converging from opposite directions. Zilch started in credit and is building toward becoming a primary financial relationship. Chime began with payments and is carefully expanding into lending. Both are discovering that the sweet spot lies in combining payments data, customer trust, and intelligent credit products. Their execution differs but the destination looks similar. Zilch's flat-fee model (for example, £3 for a £60 purchase) offers radical simplicity. Chime's Instant Loans ($5 per $100 borrowed) provide similar transparency. Both reject the compound interest trap that ensnares millions in traditional credit products. The broader delinquency picture shows transition rates into serious delinquency (90+) remained largely stable for auto loans and credit cards but rose sharply for student loans. This bifurcation in credit performance suggests that while some consumers are struggling, others are actively seeking better alternatives. The record search interest in personal loans isn't just about desperation; it's about discovery. Traditional lenders might be wary of their moats evaporating. When Zilch can grow credit revenue 96% while reducing net losses 79%, it suggests the old risk models are broken. When Chime can triple MyPay margins in a single quarter, it hints at operational leverage slower moving financials can't match. What Happens Next In Consumer Credit Both companies are positioning for their next acts. Zilch is exploring listing and acquisition opportunities. Chime's successful IPO, though at a more modest $8.7 billion valuation than private market peaks, gives it currency for expansion. Tech-enabled consumer credit is having a moment. With Americans searching for personal loans at record rates and student loan delinquencies creating widespread financial stress, the demand is clear. Traditional lenders built their franchises on information asymmetry, high fixed costs, and customer inertia. Fintech credit is building on transparency, variable costs, and engagement. For investors, founders, and incumbents alike, the message is clear: the age of tech-enabled consumer credit has arrived. The 100% year-on-year growth club might be exclusive today, but with record consumer demand meeting revolutionary business models, expect the membership to expand rapidly. When trust meets technology meets fair pricing, explosive growth follows. Zilch and Chime just proved it.
Times
17-07-2025
- Business
- Times
How the FCA uses sandboxes to dig out AI fintech solutions
Zilch, a high-flying consumer credit firm that was founded in 2018 and is valued at more than £1.5 billion, first tested out its services in the 'childlike' safety of what is known as a sandbox. The parent of this play area is the City regulator, the Financial Conduct Authority (FCA), and it allowed Zilch, and the dozens of other fintech firms that took part, to play around, or experiment, without causing consumers any harm or falling foul of any regulations. Zilch's rapid rise since illustrates the valuable role that regulators can play to encourage innovative start-ups to disrupt existing markets with new approaches. Sandboxes are also a vital tool in the armoury of policy makers in their attempts to protect Britain's competitive edge in fast-moving sectors, ranging from life sciences to space exploration. After using the sandbox for 12 months, Zilch launched in 2020 with a licence from the FCA and has since been used by over 4.5 million customers. Desmond McNamara, its chief risk officer, said: 'The sandbox programme allowed us to go through that process of regulation whilst we were building the business. If we had to build the whole business, then apply, it would have been harder.' The FCA has doubled down on its approach with financial services, launching last month what it has called a 'supercharged sandbox' to help facilitate the rapid introduction of AI-powered financial services. In essence, a sandbox gives technology companies a controlled environment to test systems safely. In the case of the AI sandbox, announced last month, the FCA is letting businesses test AI applications such as fraud detection, real-time credit scoring and enhanced customer service. Companies use dummy data created by the FCA, such as fake card numbers and bank account details, and also have access to computing power that they might not otherwise be able to afford. The FCA has struck a deal with the chipmaker Nvidia to provide access to its data centres and also some of its software. The application period is now open and the first companies are expected to start experimenting in October. Alex Kirkhope, partner at Shoosmiths, a law firm which advises companies on how to use sandboxes, said: 'It's a space that allows businesses, especially smaller businesses, the ones who don't have the infrastructure or the access to computing power, to be able to do that themselves, whether they're developing those systems themselves or whether they are looking to deploy them and understand how they operate.' Kirkhope said it was significant that Nvidia has chosen to partner with the regulator on this project. 'Their chips are some of the most advanced processing that exists in the world today. Their involvement, investment and interest in the UK economy and UK fintech space has to be seen as a positive because if they weren't talking to us, they would be talking to China, US, and probably other major European nations,' he said. McNamara from Zilch said the sandbox was particularly attractive to start-ups, which are typically still learning what they can do and what the regulator will allow them to do. 'The regular authorisation process is more naturally tailored to firms who are already authorised and they were adding to their authorisation,' he said. 'Whereas the regulatory sandbox allows firms who are starting out, because there is a more natural startup culture, you don't have to come with the answer to everything at the start, it's much more of an interactive process.' Francesco Fulcoli, the chief compliance and risk officer at Flagstone, a savings platform, is one of those considering using the new testing environment. Flagstone already manages £16.2 billion in people's savings and it is hoping to use the FCA sandbox to test its use of AI for customer support, anti-money laundering and a fully automated process for new customers starting an account. 'Working with many other regulators across the globe, this was a good move. Not many regulators are going that direction,' he said. 'I think it's a good step ahead and will help the fintech environment to keep growing in the UK.' Nicky Goulimis, co-founder of Tunic Pay, a fintech company that helps banks stop fraudulent bank transfers, is another hoping to use the sandbox to help build out its AI. Goulimis said she was particularly encouraged by the FCA's inclusion of agentic AI, which uses reasoning to autonomously make decisions and perform tasks. 'It's going to massively encourage innovation because it's unlocking new use cases that would otherwise not be possible. My interpretation is that this is the FCA saying, we are open for business around agentic systems, which has historically not been the perspective,' said Goulimis. Tunic Pay has already started using AI and is hoping access to the sandbox will help the company collaborate with the government and 'push the imagination' of what can be done with AI agents for scam detection and prevention. • Mandelson wants the UK to make a tech 'moonshot'. Can we do it? Financial services is not the only area of the economy where regulators are using sandboxes to let startups experiment. The Department for Science, Innovation and Technology has funded sandboxes to help industry and academics work on wireless technology, engineering biology and novel space activities. Kirkhope said the latest AI sandbox is just one piece of the puzzle for harnessing AI. 'The government needs to invest in and encourage the build-out of AI infrastructure, particularly compute and data processing, data centre capacity within the UK. And I don't think we should underestimate that challenge. Unless it all works together, we can only get so far,' he said.
Yahoo
09-07-2025
- Business
- Yahoo
Fintechs urge Reeves to incentivise floats to boost flagging London market
Some of Britain's leading financial technology companies have urged the chancellor to incentivise them to list on London's flagging stock market or risk seeing them turn to rival international exchanges. Sky News has learnt that Rachel Reeves met executives from companies including Atom Bank, Clearbank, Revolut and Zilch on Wednesday morning to discuss the launch of the Treasury's financial services growth and competitiveness strategy. Sources briefed on the meeting said the chancellor was pressed to consider allowing investors in newly listed companies to benefit from stamp duty holidays or capital gains tax cuts as a way of encouraging fast-growing businesses to float in the UK. Money latest: Lidl trials supermarket theft 'VAR' One said that had "listened" to the suggestions from industry executives, but had not expressed an opinion on them. The pleas came days after data was published showing the London Stock Exchange had had the worst start to a year by volume of funds raised through initial public offerings in at least three decades. Ms Reeves plans to restrict the amount that can be saved in cash ISAs in an attempt to draw more capital into public markets - although that decision too is facing stiff opposition from some quarters. Some of Britain's leading fintechs, such as digital bank Monzo - which was fined more than £20m for anti-money laundering failures this week - are considering floating in London or New York. Revolut and Zilch are also expected to consider both listing venues seriously when they decide the time is right to go public. A Treasury spokesperson said: "Fintech is the future of financial services. "Next week's Mansion House will set out how we plan to support the sector to thrive."
Sky News
09-07-2025
- Business
- Sky News
Fintechs urge Reeves to incentivise floats to boost flagging London market
Some of Britain's leading financial technology companies have urged the chancellor to incentivise them to list on London's flagging stock market or risk seeing them turn to rival international exchanges. Sky News has learnt that Rachel Reeves met executives from companies including Atom Bank, Clearbank, Revolut and Zilch on Wednesday morning to discuss the launch of the Treasury's financial services growth and competitiveness strategy. Sources briefed on the meeting said the chancellor was pressed to consider allowing investors in newly listed companies to benefit from stamp duty holidays or capital gains tax cuts as a way of encouraging fast-growing businesses to float in the UK. One said that had "listened" to the suggestions from industry executives, but had not expressed an opinion on them. The pleas came days after data was published showing the London Stock Exchange had had the worst start to a year by volume of funds raised through initial public offerings in at least three decades. Ms Reeves plans to restrict the amount that can be saved in cash ISAs in an attempt to draw more capital into public markets - although that decision too is facing stiff opposition from some quarters. Some of Britain's leading fintechs, such as digital bank Monzo - which was fined more than £20m for anti-money laundering failures this week - are considering floating in London or New York. Revolut and Zilch are also expected to consider both listing venues seriously when they decide the time is right to go public. A Treasury spokesperson said: "Fintech is the future of financial services.
Yahoo
04-07-2025
- Business
- Yahoo
British fintech Zilch on hunt for overseas bid targets
Zilch, the consumer lender which has become one of Britain's fastest-growing fintech companies, has begun a search for international takeover targets as it accelerates its expansion ahead of a bumper stock market listing. Sky News understands that Zilch, which is run by co-founder Philip Belamant, is working with advisers to identify peers outside the UK which it can acquire in the coming months. The company, which is regulated in the UK and counts eBay among its investors, has amassed a customer base of more than five million people. Money latest: It is now among the UK's most valuable fintechs, making its future public market debut a hotly contested prize for stock exchanges in London, New York and elsewhere. Mr Belamant has been an active participant in talks with regulators and policymakers about reforms to London's listings regime amid growing concerns about the relative attractiveness of UK public markets. Last year, he warned that Zilch could float outside the UK without meaningful efforts to incentivise "retail investors to buy and hold British stocks". Sources close to the company said Zilch had generated more than £750m in savings on interest and fees for customers since its launch. Payments through its platform now have a gross merchandise value of more than £4bn, they added. Zilch has annual revenues of more than £150m, making it well-placed to snap up rivals which are too small to raise additional capital or list on the public markets, according to insiders. In recent months, the company has also been exploring its own private share sale to raise funding, having hired Citi to work on the mandate. Its last fundraising valued the company at about £1.5bn. Other Zilch investors include Goldman Sachs and Ventura Capital. Zilch secured authorisation from the City watchdog in 2020 and now offers customers a digital debit Visa card earning up to 5% of spending in rewards. In the same app, customers can switch to a credit card, allowing customers to spread repayments with zero interest over six weeks or three months, enabling them to build their credit record. The company differentiates itself from other Buy Now Pay Later companies because it is already regulated by the Financial Conduct Authority. In total, Zilch has raised £500m in equity and debt since it was founded. The company employs more than 250 people. Zilch declined to comment on Friday.
