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November 10, 2020

In Conversation With

Why an e-money institution license offers the best of both worlds with Ziglu


London-based Challenger-bank Ziglu recently received an electronic money (e-money) institution license from the UK’s FCA. Mark Hipperson, Ziglu founder and CEO and former Starling bank CTO, explained what it enables the company to do, saying:

(13:19) “So being an e-money company means that you’re regulated to safeguard customers’ money. So we have that in a separate safeguarding account, which is a good thing for customers. But it also enables us to be able to deliver some current account banking type features that traditionally only banks could provide. Anyone anywhere…so if you’re a Ziglu customer, you can pay each other in fiat currency/traditional currency, or cryptocurrency. But also you can use UK faster payments as well…And we’ve got a whole lot of other payments coming in due course in terms of European payments. SWIFT and those things in due course. But also that’s enabled us to launch cards as well…We’ve got a MasterCard, a Ziglu MasterCard debit card that we’re testing with right now around London and the UK.”

There are also things that Ziglu can’t do with an e-money license vs. having a full challenger banking license, and that is just fine with Hipperson, who explained:

(14:34) “The flexibility it affords in being able to do crypto, it’s very difficult to do that if you’re a bank. And it enables us to be able to manage our capital adequacy a little differently so we don’t have to put quite as much money with the Bank of England to be able to do the things that we do. The banking license is I guess the toughest and most challenging thing to achieve in the UK and we’re very proud to have done that at Starling Bank as quickly as we did. But I think that there are one or two companies out there that prove that you can be very successful and do many of the things if not all of the things that challenger banks can do.”

Nisa asked Mark when digital assets will appear on the statements of everyone’s bank accounts, in response to which the Ziglu chief said:

(19:31) “Well they appear on our’s today. So if you have a Ziglu app, your currency transactions no matter what currency they’re in appear in your app and that’s the way that we do it. So your GBP, your bitcoin, your ether, are all there. And every time you do a transaction, no matter what currency it is, whether it’s on a payment or you’re sending some money to a friend, or you’re using your card, all those transactions appear chronologically…They’re in our app now. (20:04) Now, will the other guys catch up? I imagine they will in due course, those that are for crypto. But banking is going to be tough as I said earlier, whether they will be allowed to get into it or they’ll choose to get into it. We’ve all heard the resistance of the banks over the years from Goldman to JPMC saying ‘never never, we won’t touch it’ to ‘actually we realize it’s here to stay now. We realize it’s not a problem.’ And they’re embracing it now.”

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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