EXCLUSIVE: ‘Opening doors’ – Jamie Campbell, Fronted in ‘The Fintech Magazine’

Finding somewhere to live is a stressful – and expensive – experience for anyone. But the UK’s four million renters have a unique set of problems. Jamie Campbell’s open banking-driven platform Fronted is making it easier for them to move on

Jamie Campbell had witnessed what it was like to be at the wrong end of the property ladder: that is, below the first rung. Which is why he launched Fronted to support one of ‘the least well-looked-after demographics in the UK’. Renters.

So, as co-founder of Fronted, he’s set out to make at least one of aspect of private tenants’ lives easier, using open banking to prise a down payment for their next home when the deposit is still tied up in the last. For many of the UK’s nearly 4.5 million households in private rented accommodation, who are, on average, moving every two to four years, having to find around £1,000 every time they relocate is at worst, impossible, and, at best, a struggle.

By using open banking and financial technology to offer a credit product designed to finance deposits directly, Fronted believes it can reduce the emotional stress and time-consuming hassle that comes with moving, lending to tenants more cheaply than existing options and at lower risk to itself. As Fronted charges no early repayment fee, Campbell says it’s a solution particularly suited for those looking to bridge the payment gap between tenancies, when a new deposit may be requested before an existing one has been released. That was precisely the situation his girlfriend found herself in.

“The landlord put the property on the market and they had to leave, pronto,” says Campbell. “But they needed two or three months to save up to move or borrow. I thought somebody must have fixed this because, to my mind, it’s where fintech works best: where there’s a niche customer problem, which is felt really acutely, that technology can make easy.” But, back in 2018/19, he couldn’t find any. “There were [no-deposit] insurance schemes available, but they were really expensive, and mostly owned by estate agents,” says Campbell. “When I started digging into the size of the market and how many people who are renting don’t have savings, I was like ‘OK, there’s something interesting here’. That started the ball rolling.”

He wasn’t new to this area of finance. While working at Bud, the UK-founded startup helping banks deliver open banking solutions, Campbell had been involved in another solution addressing problems in the rental sector. In 2017, the Government announced the Rent Recognition Challenge – a £2million prize fund encouraging firms to develop applications to enable tenants to record and share their rental payment data with approved lenders and credit reference agencies. Bud used the fund to build AI software that automatically detects when an individual is paying rent and prompts them to get the payments verified. These payments are gathered in a rental profile that can be shared, via open banking APIs, with banks, mortgage brokers and other relevant services, to help renters demonstrate good financial management on their way to home ownership.

“Bud created a product with Experian called Rent Recognition, which is used by a number of companies now,” says Campbell. “That audience of renters, to me, was a really interesting demographic because, generally speaking, they’ve been the least well-looked-after demographic in the UK.”

To found Fronted, Campbell teamed up with former Monzo staffer Simon Vans-Colina and Anthony Mann, who previously worked for Apple. The all-round renters app went live in February 2021. Renters who apply to use the Fronted service are asked to link their bank account details, giving access to transaction data. Once Fronted has run the required checks and agreed to provide credit, the start-up sends money directly to the estate agent managing the client’s let, to be placed in one of the UK’s three deposit protection schemes. Around £5.5billion sits in these schemes right now.

“Essentially, the money is in escrow until you move out. We wanted to use a cash solution to fit into this ecosystem, but we also wanted to be really pro-renter,” says Campbell. “Generally speaking, most people come to us to get a deposit in principle first, to see how much they could get from us, then go and shop for a property, which is a really interesting behavioural change. “Only around 20 per cent of people who come to us are renting for the first time.

The vast majority are moving from one property to the next. And there’s this bridging occasion, which just doesn’t seem to be going away, where the landlord of the property that I’m exiting wants to hold on to the deposit until after they’ve done their survey, gone around to see if you’ve marked the walls, or dirtied the carpet, to see how much they think is fair to take from the deposit to fix things, while the landlord of the property that you’re moving into wants to get the deposit as soon as possible, because they want to de-risk the fact that their property is void. You’re always going to have this crossover, which means that people are always going to have to find double their deposit for this weird two-month period.

“We wanted to create something which was really cost effective for renters to borrow from us, and, if and when they get their previous deposit paid back, have the option to settle early for no fee or maybe just go and buy a couch!”

So why hadn’t it been done before?

“The reality is you probably couldn’t build this business two or three years ago,” says Campbell. “The UK finance market has started to see quite a significant infrastructure shift. A lot of digital capabilities are accessible by API now, and our business is essentially built on that ethos, with interconnectivity of services and finance embedded in customer journeys. That’s the crucial bit: trying to fit a finance proposition around something that people are already doing.”

Customers have also taken a while to get comfortable with the idea of sharing their financial information over open banking channels. “When we started Bud, we knew the power of open banking was going to have an impact in the UK, but when it first came to market it was hard to engage with,” says Campbell. “There was lots of typing out usernames and passwords, and the APIs weren’t very sturdy. Now, it’s just an app-to app redirect, so it’s a really good customer experience.”

ALL-ROUND RENTER’S APP

Founded in 2019 and originally slated for a March 2020 launch, like many other business owners, Campbell and his partners were forced to put their plans on hold when the pandemic hit.

“No-one could move home or view properties for about four-and-a-half months, so all the work we’d done on the product, we couldn’t test because we just didn’t have people who were in that mind-set. Getting early feedback on what we were building became really difficult. And so we hibernated the business, and then tunnelled through to greener pastures, which is kind of where we’re at right now,” says Campbell.

Fronted is an ecosystem-native. It’s strategy from the get-go was to work with partners, using APIs to integrate them. “We worked with Credit Kudos on the open banking connection. They’re a credit reference agency as well, so it gives us a nice balance of working with an open banking provider who can also help us assess the affordability and creditworthiness of our customers,” says Campbell.

“Businesses like Modular, who have made digital banking services extremely easy, and our loan book provider, Yobota, have been incredibly flexible with us. We’re pushing ahead with our partners and seeing really good results.”

Initially, Fronted will generate revenue through interest charged on deposit advances. It then plans to extend its product offering with additional services to help address the myriad other problems faced by renters: broken boilers, lost or no internet connection, water leaks…

“We want people to get cash back on their rent payments; to have internet on the first day they move in; give them a move-out service, so they’re not getting hit with huge fees. We want to help people protect their deposit as best as possible,” says Campbell. “We want to be the first app on every renter’s phone that fixes renting.”

This article was published in The Fintech Magazine #20, Page 37-38