Challenger banks and Chip savings

[sarahchip]

Hi all!

There’s been a lot of questions recently around our new Monzo/Starling/Revolut/N26 integration, why these new challenger banks only connect to Chip via your bank card, and what this means for your saves.

Currently, you connect Chip to Monzo, Starling, Revolut & N26 using just your bank card, which means we don’t have access to your transaction data.

Instead, we use average data from all Chip savers (we’ve analysed well over 180 million transactions). We cross reference this data against your profile (age, your bank, where you live, etc…), to calculate how much you should put aside.

We hope you won’t even notice the difference. We think it’s a pretty smart algorithm!

Of course, this means that the automatic saves are not personalised using your data, and this is still something we’re working towards. Also, importantly, whilst we’re pretty confident Chip won’t take you into your overdraft, we can’t guarantee it like we do when we have a full bank connection. However you will have time to cancel any saves before the money leaves your bank account.

So, why have we only released card saves for these new banks, and not full bank connections?

The fact is, integrating these challenger banks requires onboarding a new service provider, which in turn means a long-winded regulatory / compliance sign-off process. This is because there’s a bit of uncertainty around open banking and re-authentication of your account.

We thought that it would be much better to release card saving now, rather than keep you waiting for even longer until bank connections are ready. Also, in the case of Revolut which is only a card and not an account, we wanted a way for their users to be able to use Chip.

As mentioned, we are working on those bank connections, but we do need you to be patient for a little longer. Until then, give the card saving a try!

If you’ve got any other questions or want some more clarity into any of these points, ask away!

[jameshill]

Awesome, good explanation, feel much better about the whole situation now. Thanks!

[sarahchip]

Glad to hear it, James!

[Marsares]

The thing that people need to keep in mind is that whilst Open Banking is an absolutely incredible concept, we are still far from what it envisages to be.

Unfortunately, a lot of the traditional banks see opening up their data to customers and other providers as a threat. For most of its history banking has relied on complacency. Therefore, many banks follow the letter of the Open Banking rules, but not necessarily the spirit.

As a result, whilst in theory their APIs should be fairly similar. In reality they are not. There are major differences between the quality of data and how their APIs are implemented. This makes it onerous for a small FinTech like Chip to get all bank connections to act in a reliable fashion, as in reality they are juggling a whole host of APIs.

Now, I wouldn’t put the challenger banks in this bucket as by and large they have much better APIs, but they too have differences amongst them which adds yet another layer of complexity.

Bank connections are the holy grail, as it allows for completely personalised auto saves. I know Chip is working towards this, but these things take time unfortunately.

I believe that the end-state is where bank connections will be available for all banks, but that a card connect can be offered as an intermediate step for new users who want to get up and running quickly and try before they connect their bank.

[PaulChip]

Hi Marsares,

I think you’re pretty spot on!

Paul Chip

[Marsares]

@PaulChip

I think you’re pretty spot on!

If only my wife would say that more often.

[sarahchip]

Completely spot on!

Also, I’m not 100% up on the technical details, but @chip-shiv was explaining yesterday that in some cases we would currently need to re-authenticate the Open Banking link every 90 days, which could be pretty frustrating for a lot of users as they’d need to reconnect through the app.

[o99]

@sarahchip

We cross reference this data against your profile (age, your bank, where you live, etc…), to calculate how much you should put aside.

Is it possible to provide any further information on what is encompassed within “etc” ?

I would expect the most useful piece of information would be income, but of course that’s something you don’t have. Perhaps it is something we could provide on an optional basis?

@Marsares

As a result, whilst in theory their APIs should be fairly similar. In reality they are not. There are major differences between the quality of data and how their APIs are implemented. This makes it onerous for a small FinTech like Chip to get all bank connections to act in a reliable fashion, as in reality they are juggling a whole host of APIs.

So use an intermediary like TrueLayer, SaltEdge, Yodlee, or Plaid to do that job ?

@sarahchip

Also, I’m not 100% up on the technical details, but @chip-shiv was explaining yesterday that in some cases we would currently need to re-authenticate the Open Banking link every 90 days, which could be pretty frustrating for a lot of users as they’d need to reconnect through the app.

Personally, I’d rather reconnect every 90 days than rely on a less personalised approach to auto-save decisions.

[sarahchip]

@o99

Is it possible to provide any further information on what is encompassed within “etc” ?

I would have to see. We obviously can’t give out the full details, but I’ll see if we can go into it in a little more depth at least.

@o99

So use an intermediary like TrueLayer, SaltEdge, Yodlee, or Plaid to do that job ?

That’s what we will be doing:

@sarahchip

The fact is, integrating these challenger banks requires onboarding a new service provider, which in turn means a long-winded regulatory / compliance sign-off process.

@o99

Personally, I’d rather reconnect every 90 days than rely on a less personalised approach to auto-save decisions.

I understand that, and I think a lot of people would be in the same boat as you, but then we would have a lot of users who would find it frustrating as they prefer to just let Chip sit in the background and do it’s thing, so we need to find a balance between those groups,

[o99]

@sarahchip

I understand that, and I think a lot of people would be in the same boat as you, but then we would have a lot of users who would find it frustrating as they prefer to just let Chip sit in the background and do it’s thing, so we need to find a balance between those groups

Do you know if that’s based on user research, or just an assumption (I mean if given the choice between a completely personalized auto-save approach vs a less personalized approach but without the need to reconnect every 90 days)?

[liamchip]

Hello! I’m on the product team here at Chip, so will just jump in to help clear a few things up

It’s important to reiterate that we are not removing bank connections and AI savings from the app - in fact, for the majority of our users we are providing a better saving experience with this update.

With this new update, if a problem/disconnection occurs with a bank connected account, we can automatically switch their saves over to a data based save approach and allow that user to continue to save until their bank connection is resolved. We think this is great!

We still firmly believe that giving our users access to AI savings is the right thing to do, and we are working towards this already - but it takes time (even using integrations such as TrueLayer, Salt Edge etc.).

With regards to user research, we made sure that we carried out lots of testing with both existing and new Chip users. We listened to feedback from users around bank connection and some of the problems that arise with certain banks, and we are confident in our decision that this is the right step for us to move forward with.

Hopefully this clears things up, but feel free to ask any other questions you’ve got - we understand this is a big change!

[Marsares]

@o99

So use an intermediary like TrueLayer, SaltEdge, Yodlee, or Plaid to do that job ?

Like Open Banking, a simple solution on paper, in reality not so much. Intermediaries like this take most of the pain out, but not all. I know the COO of TruLayer and the CEO of OpenWrks and they’d be the first to admit that.

Companies like Yodlee and some others also are not AISP authorised by the FCA and will thus be grandfathered soon. Yodlee also uses mostly screenscraping which is unreliable at best.

My choice would be either SaltEdge or TruLayer, but you do then layer additional cost on your model, which may be offset by less in-house development time - or not.

As far as I understand, the intention is to move towards an intermediary, but it’s not the flick of a button that some believe it to be.

[o99]

@Marsares

As far as I understand, the intention is to move towards an intermediary, but it’s not the flick of a button that some believe it to be

I get that. I suppose my frustration with the current situation stems from the fact that Chip have been publicly saying connections to challenger banks are coming for over a year. Now the position is an intermediary will be used to facilitate this but that’s not ready yet. Furthermore, there are other small fintech firms that directly connect to Monzo & Starling without an intermediary. One that I use is probably smaller than Chip and has been doing it since early 2018.

I get that any business has to decide how to allocate finite resources, but from the outside the whole timeline of events and where we have ended up looks less than impressive.

[Marsares]

@o99

I get that any business has to decide how to allocate finite resources, but from the outside the whole timeline of events and where we have ended up looks less than impressive.

I hear you. I think what would massively benefit the community is a having a publicly available roadmap. Many startups like Monzo, FreeTrade, etcetera have one.

The purpose is not to hold the startup accountable, as things do change and that is the nature of agile development, but to give transparency to the community and also garner ideas from them.

[Stupot]

So I connected Monzo a few days ago and saves have come out of my account. Today I was told to disconnect my current bank as I was in front of the queue. I’ve tried to reconnect Monzo but now get an error and I’m stuck!

[sarahchip]

@Stupot

So I connected Monzo a few days ago and saves have come out of my account. Today I was told to disconnect my current bank as I was in front of the queue. I’ve tried to reconnect Monzo but now get an error and I’m stuck!

Sorry about that! It was a temporary issue from JudoPay, but it’s been resolved now and you should be able to connect your Monzo card with no issues now, if you haven’t already!

[Stupot]

I did, eventually, but the money that had originally come out of my Monzo card ended up getting transferred back to my NatWest account! Total shambles of a sign up process!

[Stupot]

To make it worse, I cancelled an auto save which seemingly failed and the money came out anyway!

[sarahchip]

Sorry about that! If you speak to livechat, they can get your NatWest account removed and get that cancelled save refunded for you.