“Seven out of 10 students leave compulsory education not being financially literate.
“It’s a shocking statistic which I found out during my undergraduate dissertation on financial education in Scotland’s secondary schools. It was the first time I had proved there was a problem, and it resonated with me - because when I was young, I messed up my own credit score and it had a significant impact on my financial wellbeing. Even worse, it was very challenging to rebuild it.
“This really shouldn’t be the case. I have faced financial decisions much more than I have used Pythagoras Theorem, so why is there so little focus placed on financial education in our schools? There are several reasons why this is not the case, the main one being strict budgets.
“Progressing through my undergraduate degree and researching the causes of the financial crisis of 2008 and the PPI scandal, I did not like what I was seeing. I felt that banks were putting profits before people and I am happy that the Financial Conduct Authority appears to realise this and is taking steps to address it.
“However, personal debt is once again at record levels, even higher than before the financial crisis, and Britons are paying £140 million in interest every day.
“This, coupled with the fact that 68 per cent of people do not understand their overdraft charges led me to the conclusion that there is a huge opportunity to replace the lack of financial literacy with artificial intelligence and create a level playing field. It is not the customers responsibility to understand finance, it’s the responsibility of the providers. There is a huge opportunity now to reshape the way we lend, to create a successful and profitable business that is trustworthy and transparent.
“My biggest success so far is getting onto the FinTech Accelerator at Strathclyde Enterprise Network. Since then, I have been building the prototype app for BankPal and working on the business plan.
“The ambition is for BankPal to be the go-to app for short term lending, for customers to stop using high-cost overdrafts and payday lenders. Also, no matter what level of financial literacy people have, everyone will have the exact same financial capability using their BankPal app.
“It is important for me to get this right, to make sure that customers absolutely love the business but also understand its purpose. I have opportunities coming up to travel to London or the United States to speak with venture capital firms, which is great - because the biggest challenge by far for me - and probably for any young fintech business - is funding.
“On top of the initial cost of developing software and authorisation, I have to raise capital to fund the loans that will allow customers to consolidate and reduce their costs. The business has to remain cost-effective for the customer, therefore the funding has to come at the lowest possible cost, which for most investors will not be attractive enough to compensate them for the risk.
“However, I feel that there is great support in Scotland for young businesses like mine. The fintech community is completely buzzing. Stephen Ingledew, CEO of Fintech Scotland, does an amazing job at bringing the ecosystem together; collaboration is priceless and I truly believe we are only just starting. I have direct contact with the FCA and other third parties who are more than happy to point me in the right direction.”
Daniel Sloan is the Founder of BankPal and is a panellist at The Scotsman Conferences’ event, What Did Fintech Ever Do For Us? On Wednesday June 5th. Book here