The former CEO of TSB Bank, Paul Pester, has joined forces with Metro Bank and Atom Bank founder Anthony Thomson, and Compare the Market founder Matthew Donaldson, to develop a new social networking app named Loop.
Loop is set to be the first UK-based social networking app that allows friends and family to share money, with its launch expected sometime in 2022.
Beta testing for the app started last week, and it has already received a significant amount of seed funding from investors eager to get the project up and running. Series A funding is expected to start early next year.
Pester and his team are said to have identified a trend of informal money sharing between friends and family, which was only exaggerated by the pandemic. This trend is currently not supported by high street banks or newer, online banks like Starling Bank or Monzo.
The untapped market is valued at about £12.5 billion each year.
The saturation of the financial app market has reached a breaking point
Loop is yet another finance-focused app that will be added to the mix in 2022, and it begs the question of how saturated the fintech market can get before the platforms start to struggle to attract new customers.
AJ Bell is set to release its new investment app Dodl next year, and Lloyds Bank is unveiling its new personal pensions arm soon as well. Lloyds aim to challenge the likes of Hargreaves Lansdown and Vanguard,which currently dominate the pension market.
Such rich competition recently caused Wealthsimple, a Canadian-based robo-advisor platform, to withdraw from the UK market. Eligible accounts on the Wealthsimple platform will be transferred to Moneyfarm and invested into managed portfolios.
Investing Reviews CEO, Simon Jones, warns that Wealthsimple may be the first of many apps to exit the crowded market and that users should be careful when deciding which services to use.
He adds: “Do as much due diligence as possible to make sure the basket you do put your eggs in will still be around in a few years.”