Revisionary exercise in startup strategy — Part 5/5
By: Evelina Vrabie
Tags: Strategy, Entrepreneurship, Fintech, Founders, Startup

Touco with an Architecture strategy

Customers

We briefly considered Touco as a specialised financial platform. Other firms like fintechs, lenders, financial institutions, charities etc. could create and exchange value through plug-and-play digital tools designed to improve the delivery of their services to their end-users in vulnerable circumstances.

Competition

We would compete with other platforms like Hydrogen and Tink, starting initially more niche.

Technology

We would use Open Banking to create modular software components (APIs, SDKs etc.) for third-party clients by combining APIs and SDKs from other providers.

Identity

Our team would have to invest extensively in biz-dev, potentially hiring multiple partnership managers. Customer acquisition wouldn’t be cheap.

Why we didn’t do it

Launching a platform requires large network effects. There are many interesting stories about guerilla strategies to kickstart a platform. We would’ve needed significant investment and lead time, which we didn’t have, especially with Covid-19.

We experienced this while trying to launch the Care Card. We had to integrate multiple providers to create a workable solution in a short time. We needed KYC, a card and OpenBanking (AISP and PISP) provider with an Agent model. Only one card provider matched our specific requirements.

The selection and due diligence were time-consuming and Covid-19 lockdown made it worse. A platform with enough choice would’ve saved us some time and kept costs low with negotiating power and economy of scale.

Touco with a Disruption strategy

Customers

We entertained the idea of Touco as a new challenger bank for customers in vulnerable circumstances, who are left out by neo-banks and traditional banks.

Competition

We would compete with Monzo, Starling, Revolut etc. plus high street banks. We thought that existing players wouldn’t make immediate efforts to capture this user segment. Starling took steps in that direction during Covid and other banks followed.

Technology

Long term, we would build the payment infrastructure to retain full control of the data and ensure it’s not misused. The alternative was to use existing rails, like the other challengers.

Identity

Our CEO, Bailey, had been an early employee at Monzo. All three of us had been in at least one startup to scaleup journey before. We knew a good chunk of the challenges involved.

Why we didn’t do it

We knew that launching a challenger bank is…challenging. We also didn't believe this strategy had a good revenue model. Other challengers are struggling even without the added issue of serving users in vulnerable circumstances, who would need to pay for basic banking services. Other freemium models remain unproven.

Option 4: Touco with a Value Chain strategy

Customers

We chose a B2B2C model to serve the end-user and our corporate partners in a way that benefits both parties.

For the end-user, the tools would be free or freemium down the line, with proven value-add.

For our customers, we would solve the upcoming challenges raised by the FCA’s new guidelines with a significantly smaller build and ongoing cost. Our revenue model was via an enterprise license with multiple cost tiers for banks, smaller lenders, service providers, charities and care agencies.

Our solution spectrum, as detailed in Touco’s report.

Competition

We chose to partner with multiple stakeholders and enhance their value proposition rather than head-on competing.

Technology

We built the software for all three solutions on the spectrum, including the Care Card in developer sandbox. We quickly tested the first two with our pilot users.

We chose four technology partners: Open Banking AISP, PISP, KYC and card provider. We considered distributing our software in three ways:

Touco-branded apps: Touco is leading the user acquisition with promotion via our corporate partner’s channels Co-branded (Touco plus customer brand) apps: User acquisition is shared by Touco and partners Customer-branded apps (white-labelling): User acquisition is done by the partner, Touco provides the software tools.

Identity

We believed this strategy was the best fit for our founding team and ecosystem we were at the time. My two co-founders have business development and marketing backgrounds and previous experience in dealing with banks. On top, we got accepted in several fintech accelerators including OB4G and Barclays Techstars.

Why we chose it

As research and design-driven tech-for-good startup, we were ideal to empathise and understand the end-users’ needs. We were good at fast iterations of user research. We were able to attract talent and expertise from academia, research charities and experts through lived experiences.

But, as Bailey’s post explains it, we didn’t manage to secure the partnerships we wanted in a reasonable amount of time. To launch the card publicly on our own, we would’ve needed to pay upfront costs and agree to monthly minimums with our providers. We simply didn’t afford that.

Now we’re working hard on the next part of the entrepreneur’s dilemma and testing a few new ideas.