Pockit, an all-in-one financial services app for UK consumers, lands $10M

Pockit, an app that offers financial services to people “underserved by traditional banks,” as the startup describes it, announced today that it raised $10 million in a funding round led by Puma Private Equity, with participation from The North East Development Capital Fund.

With the tranche, which brings London-based Pockit’s total raised to around $50 million, the firm plans to enhance its credit building tools, introduce a buy now, pay later product and extend its platform into investments, insurance and savings accounts, founder and CEO Virraj Jatania says.

“This new fundraise stands us in good stead to weather future headwinds and continue to build products to meet the needs of the market,” Jatania told TechCrunch in an email interview. “Our challenge is to continue to grow steadily and responsibly while ensuring we’re a service that people can rely on.”

Jatania, who launched Pockit in 2015, became aware at a young age of the impact that a lack of financial services can have. After fleeing Uganda to escape military dictatorship, Jatania’s parents settled in Nigeria, where they set up a household goods business from scratch to support the family.

“As a child, I witnessed the inefficiencies of cash-based economies and the risks it causes for people to manage their money and save for the future,” Jatania said. “After moving to London for university, I discovered that financial exclusion is an entrenched global problem, and decided to create a company to solve it.”

Pockit — which only serves customers in the U.K., at least for now — started as a prepaid card, but quickly grew to offer a number of financial services, including international money transfers, income advances and budgeting and cashback tools. Using Pockit, customers can send and receive money internationally, set up direct debits and deposit and withdraw cash across 27,000 locations in the U.K.

In addition, Pockit offers cashback deals through partnerships with retailers like Primark, JD Sports, U.K. grocery chain Sainsbury’s and Nike. And it suggests where customers could save money by switching their mobile and broadband plans and providers.

“Many financial service providers don’t offer low-income and underserved communities services because they care more about their profit margins than genuinely being financially inclusive,” Jatania said. “As a result, their legacy systems aren’t built with such customers in mind, and these giant companies aren’t agile enough to effectively introduce such features or quickly respond to market changes. Pockit is able to offer these services because they’re the very services and customers we were built to serve.”

Pockit claims to be a champion of the underserved and low-income, but not all of its services promote healthy financial living, necessarily.

Instant cash advance apps, while marketed as convenient and secure, carry risks for users. The terms and conditions aren’t always clear, and users can end up depending on getting paid early every month — and spiral. Or, they can wind up accruing overdraft fees when the time comes to pay back the cash advance.

As for the buy now, pay later feature that Pockit plans to introduce, that’s not outright consumer-friendly, either. Buy now, pay later apps encourage people to spend significantly more than they normally would, often charge fees for missing or late payments and can hurt a person’s credit if they fail to pay.

Jatania, though, stands by his assertion that Pockit has its users’ best interests in mind — as well as its investors’. He cites a recent report that found that almost of third of U.K. residents can’t access current accounts, use debit cards, get insurance or access the tools needed to improve their financial stability.

“We’ve been committed to building a robust and truly useful service for our customers over the past eight years. But in the past two years, we have really focused on making our business model more profitable through a combination of improvements to revenue and reductions in cost to serve,” he said. “The pandemic and the subsequent financial challenges facing the U.K., such as the cost of living crisis and rising inflation, have further demonstrated the need for a company like Pockit which is committed to becoming the financial champion for millions of people.”

“Financial champion” or no, Pockit has picked up quite a bit of steam since its launch, now counting more than 800,000 people among its customer base. Jatania claims that the platform has processed around $5 billion in cash across over 73 million transactions.

Part of the newly raised capital will go toward expanding Pockit’s team, which stands at close to 60 people. The goal is to bring that number to 100 by early 2024, Jatania says.