Exclusive: ‘Building crypto bridges’ – Nick Jones, Zumo in “The Fintech Magazine”

The very word cryptocurrency evokes a sense of entrenchment: a technology under siege, protected by layers of heavy locks, whispered secrets and Dan Brown-style enigmas; a distant castle of code to which most consumers see no bridge, surrounded by a moat of confusion, abstraction, geekiness, and early-adopter bravado.

That was certainly the impression that Nick Jones, CEO of Zumo, had when he arrived on the blockchain scene three years ago.

“What excited me, about blockchain, was the idea of a people-powered internet and people having sovereignty over their data, whether that’s financial or otherwise. That really got my juices flowing,” says Jones. “But I was fairly horrified at the cryptocurrency user experience, the complexity, the deliberate level of early-adopter snobbery there was around it – a bit of a boys’ club – and reputational issues, some of them deserved, some not. You know: the initial coin offering (CO) bubble, lots of borderline scams, centralised exchanges being hacked, difficulties with the on-and-off ramp.”

This insular inaccessibility inspired Jones and co-founder Paul Roach, to build Zumo: a bridge over the troubled waters separating cryptocurrency from the financial mainstream.

“We began by thinking there had to be a better way: we had to be able to build something that captures the self-sovereignty and decentralised nature of blockchain, but is usable by ordinary people, because this is the whole point of these protocols being developed,”   adds Jones. “They were supposed to make things simpler, more transparent, cheaper and faster for people to transact. Instead, it had become insanely, unnecessarily complicated.”

It was putting off the very people it was designed for. So, in 2018, Jones and Roach got together in Edinburgh and founded Zumo, a fully-decentralised digital wallet and payments platform, which enables users to buy, sell, store, send and soon, crucially, spend digital money anywhere in the world. The mobile wallet, which will be joined by a debit card early next year, currently supports Bitcoin, Ether and sterling currencies, with US dollar and euro functionality due in 2021.

Zumo partnered with payments-as-a-service firm Modulr – currently favoured by Revolut; Sage and Liberis – to add British pound (GBP)functionality to the platform soon after Zumo’s launch in May 2020. This addition realised Jones and Roach’s vision of creating a ‘seamless fiat-to-cryptocurrency payments system’ through which users will soon be able to spend their cryptocurrency as fiat money anywhere a debit card is accepted. For Jones, this is the essential stepping stone for crypto-cash to enter mainstream acceptance.

“We realised early on that mass adoption was never going to happen unless we  had an easy bridge between the new world and the old, and a way of getting in and out. That’s why we’ve ended up building out our consumer product.

“We’re not maximalists – we don’t believe hundreds of years of financial systems are about to be washed down the drain in five minutes. But we’re building a bridge between two parallel systems, trying to increase the interactivity between them,” explains Jones.

Running alongside the consumer app and wallet is ZumoPay for merchants. A plug and play application programming interface (API), it allows instant crypto-to-GBP and euro conversion so that merchants never have to handle any crypto funds.

An accessible currency

Zumo’s communications are humble and relatable, and the firm’s social media is scattered with jargon-busting posts, YouTube explainers and a cheery referral bonus to help engage users’ friends. Visit Zumo’s website and you’ll see bold mission statements like ‘smart money for everyone’ or ’creating a new fiscal democracy’.

These slogans have some clout with younger consumers, 77 per cent of whom believe that ‘the traditional financial system is built to favour the rich and famous’. That’s according to research from Allianz’s Generations Ahead study. The same study found millennials’ financial engagement is shaped by their experience of the 2008/09 recession: 24 per cent saw their parents suffer a major financial setback at the time of the crash, and 57 per cent say that, as a result, they are unlikely to ever invest in the stock market.

“They know it hasn’t been fixed since 2008, people are very aware of that,” Jones says of the financial system.

These findings mean Zumo is big on trust – and maybe that’s why it’s keen to avoid being regarded by consumers as a bank.

“We’re what’s known as a non-custodial wallet,” explains Jones. “So we don’t take custody of any of our customers’ funds, whether they’re a business or an individual user – and that’s one of our core differentiators: we give a genuinely self-sovereign experience to our users.”

In Zumo’s introductory video, Jones says it even straighter: “We’re not bankers. Zumo can’t borrow your funds. We don’t invest it, loan it, lose it or even touch it – your money is always yours.”

That’s because the cryptocurrency owned by Zumo users is stored on-chain, just like any cryptowallet, with the huge added benefit that Zumo customers can spend directly from their phone and, in future, from their debit card. Zumo charges a simple 0.5 per cent transaction fee whenever users transfer cash between the currencies the app supports.

Having assailed the trust deficit, Jones is also interested in spanning that most talked-about gulf in the financial world: accessibility. That means looking to markets beyond the UK, many of which have a higher regard for crypto, largely as a result of disillusion with governments’ fiscal management  and institutionalised corruption.

“If you’re living somewhere in the world with an up-and-down central currency and hyperinflation, we probably do function as a de facto alternative to a bank,” says Jones.

“In a lot of emerging markets, the communication challenge has kind of been settled by how unfit for purpose many of the traditional systems are there. Probably the hardest group to communicate with, in fact, are people in western societies, who don’t think it’s important. But in, for example, Ghana, where consumers don’t particularly trust the banks anyway and don’t want to keep their money there, the main threat to your wealth is keeping your money in the house and someone coming in and stealing it. So, having the money locked up in a hyper-secure mobile wallet, which is not subject to hyperinflation makes a lot of sense to people.

“In fact, we just did a social media report looking at the places in the world where the sentiment is most favourable towards cryptocurrency, and you can pretty much draw a map of those places: high adoption of technology and smartphones but a low level of trust and some economic issues with central banks.”

Global perspectives

Zumo has an eye on African and Latin American markets, and the firm is engaged in conversations with Indian partners about rolling out its currency wallet there, too. Understandably, Jones and his team favour a strategy of building out local partnerships as they roll out Zumo internationally.

“We always seek to work with a partner or partners that can provide the regulated element, the local fiat element, so that we don’t have to go through state by state, or country by country regulation,” says Jones.

In September, Zumo closed a Seedrs fundraiser over-target, with some 650 investors and £1.5million. That might have had something to do with Bitcoin trebling in value from March to August. An estimated 1.1million new cryptowallets have been created in the UK this year. Zumo itself has witnessed a 400-per-cent jump in cryptocurrency transactions across the platform since launching the app in May.

Good news indeed for the Scottish fintech, whose offices are located a hop, skip and a jump from the iconic cantilevers of the Forth Bridge. But if Zumo is to emulate the engineering marvel on its doorstep – building a safe and convenient crossing  between fiat and crypto currencies – it will need to appeal to as many consumers as possible.

“If you’re a crypto native, we’re a cool, non-custodial wallet platform, with a fiat on-and off-ramp. And if you don’t know what any of that stuff means, and you’re somebody who’s just interested in the crypto space, then we’re a really safe and easy way to take your first steps into it,” Jones says.

And that’s the key, it seems, to draining the moat around cryptocurrency. Consumers need to feel that their money is safe and secure when in crypto form. And they need to feel that their first steps towards the crypto-castle aren’t on a wobbly pirate’s plank but a firm, supportive and well-engineered platform between the old world and the new. 

This article was published in The Fintech Magazine: Issue #18, Page 57-58