"Me and my co-founder Adam found it painful to manage our business finances when we were freelancers. "
We spoke to Sam O'Connor, co-founder and CEO of Coconut, about the firm's business finance proposition and how it's helping SMEs.
CR: Tell us a bit about Coconut’s proposition and how it can help small businesses.
Me and my co-founder Adam found it painful to manage our business finances when we were freelancers. We had to cobble together an array of complicated tools like cloud accounting packages, traditional bank accounts and accountants and it got expensive and time consuming.
If you’re self-employed or a small business owner, our vision is to bring everything you need to manage your business finances into one place.
The Coconut app combines a current account with accounting tools. When you use your Coconut card it gives you guidance about whether expenses are tax deductible so you can save as much money as possible. Coconut also gives you a forecast of your tax bill so that you can put money aside, as well as helping with the tax return.
Soon we’ll connect customers to accountants if they want to chat through the app or get their accounts or tax returns reviewed and filed. We don’t want customers to have to go anywhere else.
CR: What are Coconut’s main aims or focuses in 2019? Do you have any exciting news or plans you can tell us about?
2018 was about building the Coconut technology platform. We launched for sole traders at the start of the year and for limited companies in December opening 5,000 current accounts. Our accounting engine is really powerful, incorporating rich payments data to lay the groundwork for tax automation.
In 2019 we’re building world-class accounting services and financial products on top so that our customers have everything they need in one place.
CR: How will technology continue to affect the SME market?
The SME market has such a wide range of businesses in it from 250 employee companies at the top, to part time self-employed people. 2019 will see much more focussed products for segments within the SME bracket.
For instance we’re just building Coconut for self-employed people and owner managed businesses. This group makes 90% of the UK’s 5.7m SMEs and is the fastest growing portion as more and more people search for flexibility in how they work. By targeting a group with specific needs we can do a lot more to solve their problems.
CR: How do you think Open Banking will help revolutionise the sector and what else would you like to see implemented over the coming years?
Open Banking has got off to a slow start which is understandable because it’s a big change and very complex. I’m really excited about the potential in the longer term though. Creating a more standardised and secure way for third party apps to access bank account data and initiate payments means we’ll see an explosion of products. And these products will use this data to solve bigger problems than banks currently do at the moment. I think it’ll take two to five years to really bed in.
CR: If you could see one headline about the financial services industry in 2019, what would it be?
'Brexit creates an influx of fintech investors into the UK'.