The world’s first peer to peer bank has opened in Australia, paving the way for more radical platforms for investors.
Huddle Money, based in Sydney, has raised US$6 million to start trading to challenge conventional banks.
Huddle already has a licence from bank regulators to open for business in Australia.
Founders Jason Wilby and Jonathan Buck announced the start of their operation aimed at harnessing technology to improve lives.
“We’ve witnessed how money can make life stressful for people,” said Wilby.
Freedom from technology
“Technology can free people from financial worry and unnecessary debt. Our mission is help everyone find financial freedom.”
Peer to peer banking will launch with life insurance.
Huddle will allow investors to stake money against the bank’s customers who will have their lives underwritten by financial experts.
But instead of relying on insurance risk assessments that Wilby and Buck claim have little relation to life cover and more to do with profit, investors will be able to make decisions about whether to offer cover themselves.
Huddle says banking is all about selling debt to customers and the new venture wants to break that mould.
Along with a new way of banking, Huddle wants to improve customer service and cut costs.
“We were not sure what sort of company we wanted when we started,” says Wilby.
New community philosophy
“We knew we wanted to offer better products and service while breaking away from the way traditional banks work.
“But we also want to target customer emotions because we know their money and finances are closely tied to their experiences and personalities.
The founders devised a four-point strategy that underpins the philosophy of the new bank:
- To challenge the way banks work by making Huddle more aligned with customers
- To make the way the bank is run transparent to avoid accountability issues
- To help customers make better financial decisions by giving them more advice about their money
- To cut the cost of accessing financial products and advice
They also explained that a P2P bank is a business that works in the same way as web communities like AirBnB and Uber are run.
Huddle is also developing the blockchain that drives virtual currency Bitcoin and artificial intelligence to power the business.