Michael Hobbs0:03
Good evening. I'm Michael Hobbs, the founder of Flow FinTech Limited. We are into open banking and payments, but starting from payments because we identify some big problems with payments. Payments are effectively a retrofit of card technologies into the digital age. They're also a very expensive retrofit of those technologies. The clicks that we make when we buy things are exceedingly expensive. Retailers recognize this, but we should all recognize it as well because ultimately the money comes from the consumer. So typically a large retailer is spending probably about one to two percent of transaction value on its card payments for a blend of credit and debit cards. If you're a small retailer, it's even more painful. But because PayPal and Amazon Pay both start their pricing schedules at 3.4 percent plus 20 pence per transaction, we intend to make this cheaper, much cheaper. We believe we can contribute back to the retailer a lot of margin, perhaps as much as a quarter to half a percent into the retailer's operating margins. Now that may not seem a lot, but when you think about a typical retailer operating around four or five percent operating margins, if we can put that back into their profit and loss, we have a welcome conversation. Equally, we can inject something back for the consumer in terms of loyalty points as a recompense for changing behavior towards the product that we intend to launch. The product that we should be launching is not called Flow; it's called Ray. For those of you familiar with the history of money, it is the ancient stone currency from the island of Yap. The disks don't move because they're about a meter in diameter, but the ownership of the disks changes, so they are the ultimate in trust currency. We've applied for a trademark on the word 'Ray' for use in the UK in conjunction with financial services. That trademark at the moment has been published in the trademark journal and should become ours in mid-July. So the first product will be called Ray Pay. Now we recognize that we've got to get a lot of consumer change because consumers are fairly habitual in the way they pay for things. They simply pull out the credit card or debit card that they have used for years and years, and that's the way they pay. So we need to incentivize a change of behavior, and we tend to do it by linking payments to loyalty schemes. Typically, loyalty schemes put back about a penny in the pound to the consumer in terms of incentives and loyalty points. We believe that we can double that within the economic envelope that current payments allow us. How it manifests itself to the consumer is very simple: on a checkout, you would see an additional payment option button next to PayPal, but we incentivize it. Perhaps you'd be doubling your points when you pay with Ray, and then the rest of the checkout process is defined by the open banking standards and actually operates against the consumer's bank account to put them into a familiar environment. The economics are pretty good. If we take a blended rate of 1.5 pence, we would still charge the retailer say 1.25 pence, but would immediately put back a penny of that in terms of loyalty incentive payments, retaining perhaps 0.2 to 0.25 pence for our own operating costs. Ultimately, we'd like to build a virtual bank, but Ray Pay is the first starting point. In terms of people, these are the gray-haired brigade: some senior players in payments and banking in the UK, two of which, myself and Jeremy, are ex-central managing directors. The third, Steve Turner, runs a company that is concerned with the software that runs point-of-sale terminals, so a great understanding of how to engineer secure payment systems. And then the youth brigade is a group of people that I've borrowed from Imperial College as part of their MBA projects, and they're working for me at the moment. I hope some of these will go on to become our first employees. We are in process for fundraising. We're at the seed stage, and we've done a lot of modeling which suggests that the company needs about 2.2 million in peak funding. We're starting with a request for 500,000 in seed funding, and we believe that we can make a profitable business of this by March 2021. Thank you very much.
