Dozens: Overall Update + Community Changes

They’re nice, and I use them on Monzo. I like a n.00 account balance so I use the native roundup together with ifttt.

But, that said, I wouldn’t lose any sleep if they weren’t a thing. Indeed, I’m very over ifttt - as I understand it they charge you for integration then me for use of the service.

I like @Roman’s idea of a programmable bank account. But let’s be honest: that’s niche even for us. Where I do think there’s mileage is in some native rules. The most basic is a trigger on “salary received” - but could be a whole bunch of things: changes to category, adding notes to direct debits - or more excitingly, pulling money from another account if my balance gets low; sending money elsewhere when conditions are met when it’s received etc etc.

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No, not since it stopped being free.

Direct access to your API far more interesting prospect… to actually move money programatically. I know it’s much to risky + niche to happen.

I think roundups are very popular and a good way to kick-start savings. Same for 1p challenge etc, its very accessible.

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Ditto, I have the IFTTT set for Fitbit but it died last year and I didn’t replace it. Never really felt bothered by it. Often I move the savings money back out to spend if I needed it so it’s wasn’t worth it as an incentive.

I think the real interest in round ups is Chase’s new entrant offer, where the roundups go straight to a premium rate savings account. I appreciate chase is bank rolling their 5% similar to dozens did with bonds as marketing but I’d say dozens should send round ups straight to the new 1% as an option. That REALLY makes saving a no brainer. (And once the chase offer is over would make me think about a move wholesale… That… and allowing crypto again, as that’s allowed by chase :stuck_out_tongue_winking_eye:)

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I think the issue is that as a shareholder, I can’t see the proposed Dozens Black offering with a monthly fee to have a wide appeal for most customers who don’t have lots of investments or cash to hand.

You only need to look at somewhere like Tridos Bank which charges a monthly fee and comes with a uniquely environmental USP which many agree with.

However, they haven’t really broken into the current account market as most are unwilling to pay a fee for a current account.

I didn’t mention BNPL or crypto?

However, in the interests of constructive feedback, if I consider various elements of the proposed Dozens Black offering:

Lots of banks offer fee-free ATM cash withdrawals at home and abroad without customers needing to pay a monthly fee

Sharing the interchange sounds gimmicky - whether it goes to a "good cause’ or the customer. Dozens might as well keep that income and look at lowering the monthly fee instead.

How much would customers benefit from this compared to using someone like Wise? (Edit: I see Monzo is also offering ‘0.3% cashback on international transfers’ though that’s obviously funded by fees).

The following remind me of Monzo’s failed attempt to launch a “Supporter” tier (and that’s with a brand with much stronger ‘customer loyalty’) and all customers deserve decent customer service regardless of their account type:

  • Dedicated customer service line
  • Exclusive Dozens Black card
  • Early access to new features, services and products

As others have said, you need to expand the range of funds/offer customers the option to buy individual stocks to be more attractive.

What happened to the intention to offer other savings options such as term deposits and some other innovative capital-protected savings products?

Hi @gt94sss2 ,

That’s some good insights. I totally agree with you. The Dozens Black as where it stands right now, is really only looking attractive to potential customers who already have a fairly large investment portfolio, but due to the funds availability issue (and other frictions), it isn’t looking attractive to this type of potential customers at the moment.

I assume the capital-protected savings products you mentioned are things like the structured deposits and guaranteed equity bond? These products are the result of financial engineering. They may look like a safe way to earn some of the stock market return, but in reality they are very complex products designed by actuaries to benefit the bank at the expense of their customers. Savers/investors are much better off to hold traditional savings and investment products. Here’s some pretty good analysis of the guaranteed equity bonds and how to create your own “capital-protected savings product” with the combination of a fixed savings account and an index fund.

Dozens aim was always to offer notice accounts and other capital-protected savings for domestic customers as a bridge between holding cash and equities. I recall it being mentioned several times in the past, as well as here

When the 2020 crowdfunding was taking place @AC also mentioned:

as well as Cheque Imaging (mentioned as particularly important for business accounts), offering insurance products and the potential for a Lombard Lending product (mentioned above)

It would be helpful to get an update on these, as well as what Dozens has learned from those customers currently trialling Dozens Black and their usage of the account.

Finally, on fees, I suggest Dozens do £x not £x.99 - I know some marketing theory suggests otherwise but am not sure it works as well in this market.

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All definitely part of the roadmap as well as live architecture, both technically and treasury wise. But we need longer term funding for these to be launched as I am unwilling to launch long horizon products that are difficult to unwind on a monthly or bimonthly funding pattern. Hence, the decision to build as much as nicely and as smartly as possible in this period.

Wrt shareholder views, rest assured these ideas have been vetted over months by the Board, where Clement and I still control 90% of the shares - simply because of amount invested btw not through any other means. I do also take the Seedrs commitments very seriously, and can restate my commitment that as long as I am in charge, we will never look at any deals - commercial or strategic - where your interests would be harmed.

Also, having promised an 12/18-month runway and delivered close to 30 already over a black swan event like Covid, and hitting growth numbers as promised or better, I think the discussion here needs to be more positive and mature, learning from our larger competitors’ missteps and therefore in the direction of: having built this initial foundation of tech, traction and team, what brings revenue and constitutes best monetisation for this platform, without breaking mission. It’s a long game and we have had less than three years, half in Covid!

Am all ears for your ideas on this btw - but subscription model is definitely the future of responsible banking in my view. It’s a question of how many iterations we need to get the package and pricing right, but we need to start somewhere.

On investments, agree on broadening the shelf and the only technical sequencing there is backend work on the Invest platform but we are in a position to widen shelf today if we want to. In its current form, Dozens is unlikely to offer direct equities though - it doesn’t meet suitability criteria for most of our target clients in the mass affluent savers yet to buy their first invest product.

Ps: For Savings, I can’t disclose specifics but we generally don’t view financially engineered products as Savings so its got to be a deposit product or equity funded bonuses etc. Rest could make it to Invest risk level 1, but the funnel shape would be different.

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Take your point on 0.99 - we might drop it in the future. Hard to do an A/B on so we will ensure we keep a watch on reactions somehow through research.

We haven’t really thought about cheque imaging yet but other than that, everything else you have mentioned is ready for launch within months of long term funding. For eg with term deposits - where we are not a bank - it is dependent on solid partnerships that depend on runway on both ends, and because of the setup, also add complexity to winding down. So again, back to the sequence:

  1. Fix front end alongside remaining back end work
  2. Launch Business Banking
  3. Push marketing budgets

It’s only post these three steps that I can report back on what’s working what’s not as there’s not a lot of successful profitable fintech models to learn from yet.

With just £23m raised so far, and a team of employees less than 30 and costs so low, we have built an amazing product company so far - it is missing the marketing lifecycle and pricing feedback loop but not the product and trust feedback loop. I believe we can carve a profitable and sustainable niche for ourselves when we execute this strategy but given its regulated financial services for the retail segment, our risk aversion stopping us from preemptively marketing is in the interest of our consumers. If we live and do well because of this, not despite yet, ie Trust has got to be a key brand differentiator alongside the other three pillars of cross-asset (seamless current savings investments transfers, to and fro), cross-segment (biz to retail cycle of money) and cross-border (FX products, not multiple countries).

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Let’s get @sam’s update on Biz Banking in at this point so we can also get your views in specifically on that.

Next week, we will followup with an update on partners and platform specifics from @Sandesh, bonds and 1% product update from @Tatia and a people / how we are dealing with remote working update from @hannah, to paint an even fuller picture.

Retiring for the weekend! Thanks again, so so much for your amazing engagement everyone - your thoughtfulness and care gives me a lot of hope for our future!

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Definitely interested in the bond/ savings update from @Tatia, is there a launch time for the 1% yet?

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A flat fee to hold investment funds is a big win for people with big investments through someone like Hargreaves Lansdown who are paying a percentage fee. But that is a different market to who dozens have been targeting.

Maybe actually target those guys? If not through dozens then through a dedicated fund supermarket app built upon Project Imagine.

I never really considered Dozens to be it’s own profit centre. Always thought it was a “dogfooding” exercise for Project Imagine, which I saw as a white label bank. There are lots of regional building societies etc who don’t have the tech to deliver an app and that’s where I thought the money ultimately was

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That’s very true. I think there’s a huge target market issue here.

Dozens keeps saying that they want to target the first time investors, but the fee structure clearly is only beneficial to existing investors with a relatively big portfolio worth more than £28k (comparing to 0.25% percentage fee platform). The 0.50% fee (w/o Black) is about twice as expensive as a good percentage fee investment platform, so it’s hardly attractive to anyone with a smaller portfolio.

As where the Dozens Invest stands right now, I don’t think it has a chance. The investment platform market is pretty competitive, there’s platforms like Freetrade who doesn’t charge any fee at all on a restricted selection of funds, platforms like iWeb who charges zero platform fee but charges trading commissions on a wide range of funds, and there’s also a large number of platforms charge a flat or capped fee at £45 p.a. or lower. Not to mention that those platforms all have a wider range of funds than Dozens, and more feature rich than Dozens.

To really help people change from spenders to savers and investors, Dozens need to avoid competing on fees or features, but focus on educating and hand holding. For example, the DIY guaranteed equity bonds I mentioned above is one of the great way to get a saver to start investing without taking any risk (except inflation, but most people don’t know that) on their capital. If Dozens can’t commit to 5 years fixed term savings products because the long term funding uncertainty, you can at least give your customers a best buy table, and let your customers save the cash component with another provider. The beauty of this DIY GEB approach is it can be as simple as the user commit to save certain amount of cash for 5 years and earn some of the stock market returns without risking the capital, the app will ask the user to open a specific savings account and put the details of that account in. Everything else happens in the background. For transparency, you can show the maths to the customer who wants to see it, and they will know that their money is totally safe. What a great product? The user experience will be even better if you can make a deal with the best buy 5 years savings product provider to automatically open accounts on behalf of your customers.

Thanks @AC, @gt94sss2 and @RobD - as promised, it is my pleasure to introduce you to the latest thinking behind, and vision for, the Dozens SME business banking application.

It is the first time we’ve introduced the Community to our complete business banking vision so do forgive the length of the following. Please absorb today – I’m looking forward to receiving your input on where you think we’ve hit the mark, or could maybe do more – and we’ll pick-up comments, Q and A this week.

The inspiration behind Dozens SME business banking is as old as Project Imagine itself, and was always a part of the Dozens vision to build a complete circle of money which could support equitable, economic growth through both financially healthy consumers AND businesses.

The idea is that, by helping consumers thrive, businesses benefit too, be that through consumers’ robust spending or their personal savings and investments supporting investment in businesses to help them grow. These growing businesses then need to hire more employees, making consumers better off in turn and so the virtuous cycle continues.

Screenshot 2021-10-10 at 10.21.04

Not only has this view of the world meant SME business banking was always on our roadmap, but it has directly informed product visioning such that we are not just talking about some abstract circle of money where consumers only interact indirectly with businesses via the broader economy. No, the ultimate vision is that Dozens consumer customers could invest directly in Dozens SME business customers, P2P styles, via the app. Or Dozens consumers could receive exclusive offers from Dozens SME businesses creating a deeply integrated ecosystem through which all Dozens users benefit.

And it isn’t only us thinking about what SMEs need in their business banking solution. The product I will run you through below has been influenced by numerous surveys and conversations with real UK SMEs, starting with our Business Banking co-creation day way back in June 2019, and continuing since.

So, why is it me talking to you about business banking? Well, prior to joining Project Imagine in 2019 I worked for five years in UK technology Mergers & Acquisitions. What on earth does that mean? A good question indeed. This meant that I was helping UK medium enterprises attract investment to support their business growth, or assisting Founders to sell their businesses and realise their return.

But in more practical terms, this meant that I was working with Founder teams to understand their challenges, forecast business and finance requirements and help them plan for the future. This ‘planning’ would be critical to these businesses’ success, and the ability to do this is not an advantage enjoyed by all SMEs. Hence democratising this advantage has become part of my personal mission at Dozens and part of our product roadmap.

For now, that roadmap is comprised of three phases:

  1. Cross-segment and cross-asset business banking

Screenshot 2021-10-10 at 12.29.27

From left to right, Screens 1 & 2 demonstrate our cross-segment (consumer to business) differentiation in action, where users of Dozens Business (who automatically become Dozens Black users too) can switch seamlessly between their personal and business lives, within one app. This is not as easy or common as it seems. While traditional banks have separate consumer and business banking apps, the experience is generally not a fully integrated one. And when Micro SMEs (being sole-traders or businesses up to 9 employees) are going to drive 95%+ of business current account growth over the next five years, having an offering which is built to span the personal / professional divide is a must.

What about cross-asset? What we’re talking about there is Dozens’ sweet spot. Just as we managed to differentiate Dozens in the consumer landscape by building an offering which spanned current account, savings and investment assets with instant money flows, we will give businesses the ability to organise their assets over those different asset classes to give them leverage to better organise their finances (Screens 3 – 5). An example of this is separating out money from the current account that is being held for spending in the future (e.g. VAT or corporation tax), so that they can not only visualise that spend separately, but earn a return on it while they wait to pay that tax bill too.

This is in addition to all of the spending and transaction enrichment information features which are provided in the current Dozens app, and we treat as hygiene for the business offering.

  1. Working Capital Management

This is where my personal experience, carried over from my Mergers & Acquisition days, really bites – Working Capital Management. This is a corporate finance label for financial planning and cashflow forecasting, but should be read as anything which helps businesses manage their finances on a forward looking, proactive basis (not just retrospective).

To empower this, we will aggregate all SME business financial information in the Dozens app, through accounting integrations and open banking. This last part means that even money held with other financial institutions including credit providers like Amex, can be viewed in the Dozens app (Screen 1). Our partners for offering this are already in place. In addition to this, delegated spending (expense cards), will be managed from the Dozens app giving SMEs a complete view of cash inflows and outcomes (Screen 2 & 3).

This is important, because only with complete visibility of a business’ finances can we power robust cashflow forecasting. However, with that visibility, we can provide businesses with a view of their financial future (Screen 4) including months where they will be short on cash, or others where they can invest to grow. And by building these forecasts in an editable way, we can empower business users to undertake their own scenario analysis to see how moving a spend to next month or borrowing might bridge their cash crunch. This is serious financial planning in action (Screen 5).

However, providing the tools to do this does not necessarily create the intent, and that is where bespoke financial education and insights come in (Screens 6 & 7) to help businesses understand the positive impacts of taking more pro-active and data-based approaches to managing their future.

  1. Smart lending

This is where it all comes together – both the circle of money I referenced at the start of my post, and the complete business banking proposition.

Having provided the tailored insight to enable businesses to plan for growth or borrowing requirements, smart lending would provide them with the means to procure that capital from within the Dozens app (see the bottom half of Screen 5, Working Capital Management).

Small business loans, merchant cash advance, invoice financing – these are nothing new. However, presenting them to businesses in a ‘smart’ way (i.e. as a solution to a cashflow or growth problem), and facilitating that credit with the latest in credit assessment, including proprietary and third party credit scoring data, is unique.

This approach is potentially incredibly impactful for SMEs. And if it is Dozens consumers backing the debt through P2P style lending, then we are creating that integrated circle of money which we set out to build from the start.

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The market leading 0.5% pa fee option continues to exist in Mango, its just Black that targets the segment above rather than leading through non financial products like metal cards and concierge services.

And you are right about the B2B strategy subsidising the consumer growth - we lost about £5m pa of b2b revenue (more than our burn excl new product dev!) overnight due to covid, otherwise we would be operationally profitable by now as an overall company. Also covid means the sales cycles for these kinds of deals has gone higher as digital spend focus has been on distribution (some app, any app) rather than true backend swaps or builds. Erosion of interest rates also means less cream on top for banks to choose discretionary spends with, so unless the backend is crumbling (very rare) its been reprioritised for the future rather than now.

Essentially what you are seeing from us is very similar to what you are thinking - just nuanced for market realities through and post covid.

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Only issue to making this real is that partners equally depend on long runways for these types of products - we are all incentivised to avoid messy wind-downs, including customers. You can always count on this team to choose customers’ interests and convenience/safety in all scenarios, and our culture is certainly not the ship at any cost that you see from others. Perhaps that will bite us - but like I said, if we survive, we will be big and sustainable, with that one elusive customer reaction that imho has evaded fintech so far - Trust. As expressed through high,
sticky, growing average balances.

Also, we are building a long term buy and hold, (but with easy flows both ways) Invest platform, focused on multiasset strategies augmented by high conviction multi-stock themes - not to be confused with trading (single stocks) or speculation (crypto). The world doesn’t need yet another trading platform but more people absolutely need to invest long term if countries like the UK are to avoid a massive pensions crisis in the years to come. So we are definitely not competing with Freetrade, we just need to find the right fund shelf per earlier discussions on this thread, and focus 2022 a LOT on that hand holding, so fined will be key as you say.

Would love to steer discussions towards Sam’s post and Business Banking now if possible, so I don’t break his flow with my responses. We will come back and address any unanswered questions at the end.

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Thanks so much for this. I can’t tell you how much I love this proposed new look for Dozens.

I also think that targeting the personal customer / sole trader market might be pretty smart. I wince a bit at the price point - but I’m not the target audience.

One request: I love screens 4 (cashflow) and 5 (reforecast) - and I think that I’ve been wanting something similar in a personal account without really realising it. I’d like to see somewhere that forecasts my balance after bills - and lets me model additional income / expenditure to see how that affects my cash flow. It could even play into some of the advanced financial services we’re talking about (cashflow smoothing, Lombard loans etc)… So, I think I’m just saying can you build this stuff in a way that can be easily repurposed please?!

I won’t go into this now - and it’s probably for a different topic - but I think a conversation about exactly what we (or @AC / PI) are trying to build here would be useful. We all have our own visions of the future, but I do get the sense that some of us (me included) have some strong opinions which may or may not match the direction of travel.

Thanks @SamDB

Your post and the screenshots illustrate the amount of work has gone into business accounts and it looks very promising

Initial thoughts/comments in no particular order:

a) Like @Peter I am not the target audience but also wonder about the price point, especially given the likes of Monzo/Starling/Revolut also offer a free tier to try the service and get businesses into their ecosystem.

b) When @Julia says that Dozens Black will be included, I can see that integration working for sole traders, but what about Ltd’s, trusts, charity/community accounts which will have a different legal structure?

c) Many firms may need more than one person to authorise a payment. Has that been considered?

d) Offering expense cards looked like a great idea. Will these be physical/virtual cards or both?

e) Are their plans for a website, as well as app access?

f) Interchange on business accounts can be a major revenue stream. I hope Dozens plans to retain this?

g) will it support multiple currencies?

h) what is Dozens family?

i) One real concern is:

P2P lending has become considerably less popular recently, with many P2P platforms failing and businesses unable to repay loans (not just due to Covid).

As such, and this comes down to who is the target audience discussion above, I feel that Dozens hasn’t targeted (to date) a customer base who would be comfortable with the amount of risk involved in this.

PS: just to add on Dozens Black and interchange - one reason I should oppose money going to a charity automatically, is the potential loss of Gift Aid.

One thing Pi/Dozens could consider operating some form of charity/fund raising platform, especially now that Virgin Money is withdrawing from the market. I feel this would fit in well with your stated ‘social’ mission.

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Instead of P2P, I’d rather see IFISA bonds like Triodos Crowdfunding or share purchase platform that has more transparent descriptions of risk…

I would strongly recommend you think twice about P2P lending.

P2P lending is indeed beneficial for the borrowers, but the same can’t be said about the lenders. P2P lending often looks like savings account, smells like savings account and feels like savings account, but they are NOT savings accounts. Many savers will undoubtedly unknowingly expose themselves to risks that they don’t understand and cannot afford to take.

The two major risks are geographical/geopolitical risk and credit risk.

  • The geographical/geopolitical risk is the simplest to understand, because most P2P lending platforms operate in only one specific geographical region, they don’t and can’t have a geographically diversified portfolio of borrowers. As a result of that, lenders are exposed to uncompensated geographical and geopolitical risk.

  • The credit risk is slight more complex that that. In today’s financial world, most high quality borrowers (established & profitable business with good credit rating) would prefer either issuing their own bonds or borrowing from banks who usually offers them a more favourable interest rate than P2P lending platforms. Even subprime borrowers often get a quotation from banks and then compare that to the P2P lending offer. The dominating reason for someone to borrow via the P2P lending route instead of banks is usually a cheaper rate. Banks aren’t ignorant nor stupid, they charge a higher interest for good reasons (profitability is one of them, but that isn’t everything). Therefore, if a borrower ends up choosing P2P, it’s usually because the P2P platform has underestimated their risk of late payments and default. This exposes P2P lenders to under-compensated credit risk.

I highlighted the uncompensated geographical and geopolitical risk and under-compensated credit risk, because they are unique to P2P lenders.

  • Banks don’t suffer from uncompensated geographical and geopolitical risk. Even if a bank only operates in one geographical region, they can still use swaps and other financial instruments to manage the risk exposure to the geographical region.

  • Banks very rarely suffer from under-compensated credit risk, because by lending to a business, they are putting their own money at risk. Therefore they are more motivated (and have more resources) to perform accurate, detailed and rigid credit assessment than P2P lenders who depends on the P2P lending platform which doesn’t have their own money at risk to perform the assessments.

Considering the above risks, I can hardly agree that P2P lending will ever benefit the lenders. Unfortunately, average savers (investors, to be accurate) doesn’t know this and probably will never understand this.

If you really want to help your customers, please lend to SMEs as a bank, and pay most of the interest to your customers who has savings account with you. You, as a bank, can understand the risks involved, and should have the stomach for it. If borrowers mass default on their loans in a concentrated period of time, the worst case for you is to run down your capital reserve. However, in P2P lending, your customers will see a large chunk of their money accumulated over many years (or decades) disappearing from their accounts.

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Any P2P products will technically be Investments not Savings - and also only be a stopgap for when we are not a bank.

Also the dynamics change if better credit assessment through integration with a transactional platform like Spend and metadata like CF forecasts leads to different credit ratings. This hasn’t been done before.

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