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Chip, the chatbot savings app, raises over £1M in crowdfunding with plans to apply for a banking license

Chip, the chatbot savings app, raises over £1M in crowdfunding with plans to apply for a banking license
From TechCrunch - December 20, 2017

Chip, the chatbot app that plugs into your bank account and lets you automatically save for a rainy day, has raised nearly 1.1 million on equity crowdfunding platform Crowdcube.

The fund raise, which is part of a larger 2.4 million funding round, forms part of plans for the London-based startup to apply for a banking license so that it has more flexibility regarding the kinds of products it can offer in the future. The app currently claims 30,000 active users who are collectively saving millions a month.

Specifically, a banking license would permit Chip to begin lending out a portion of customer deposits in order to power a future alternative to your banks existing overdraft, with a potentially lower and more flexible interest rate.

Right now, for Chip to offer such a productwhich it has begun beta testing, regardlessthe startup has to effectively re-sell existing financial products that already exist wholesale. This, founder and CEO Simon Rabin says, is limiting how much product innovation of its own it can introduce.

In other words, to have a crack at beating the banks, Chip has come to the conclusion that it needs to be a bank, at least in the regulatory sense, even if, as Rabin tells me, the company has no intention of introducing a current account.

Youll still be asked to plug Chips chatbot app into your existing bank accounts, with upcoming Open Banking legislationwhich requires banks to let customers share their transaction data and allow third-party apps to move money around on their behalftaking care of the rest.

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