LONDON — Martin Ijaha, the CEO and cofounder of Neyber, is one of the people featured on Business Insider’s 35 under 35 UK fintech list.
Neyber, founded in 2014 and launched in 2015, partners with employers to let their staff borrow money at attractive rates.
Repayments are then deducted from future salaries, lowering the risk for the lender and hopefully helping staff manage money better.
Goldman Sachs invested £100 million the company last year. Goldman’s investment in the UK-based startup is a mixture of debt and equity. It comes alongside an extra £15 million of lending capital for Neyber from existing investors, led by former Deutsche Bank COO Henry Ritchotte and Gael de Boissard, the former cohead of Credit Suisse’s investment bank.
‘I remember my mother coming back with £50 notes when it was her turn’
The startup was founded by three former investment bankers, including two Goldman alums. CEO Martin Ijaha, 35, left Goldman in 2012 and came up with the idea for the business when thinking about the experience of his family as a child.
Neyber has lent £70 million since 2015
“After leaving Goldman, even during my time at Goldman, I was looking at fintech,” Ijaha told Business Insider. “At that time it was defined by peer-to-peer lending, which I found interesting but really I thought there were a few fundamental flaws. There wasn’t a real value proposition for borrowers. It was largely targeting those who could already get loans from banks. I didn’t really feel that it was a sufficient solution.”
Thinking about how he might do something better for borrowers, he remembered his mother taking part in Sou-Sou, a West African savings club tradition.
Ijaha told BI: “She was a nurse. They would go to work and they would have this savings club that they called Sou-Sou, which effectively meant they put some amount of money, £50, into a pot every time they were paid. One of them would take the money home at the end of that month.”
The communal pot would act as a form of community saving, with members able to take money out when they needed.
“I just remember the experience of my mother coming back with £50 notes when it was her turn,” says Ijaha. “That was their way of helping each other save and also make sure they could borrow at reasonable rates because effectively there weren’t any rates. They did this for years and it worked.”
‘You’re cutting out the banks’
Ijaha and his cofounders — Monica Kalia, 44, another former Goldmanite, and Ezechi Britton, 37, an ex-Credit Suisse banker — wanted to apply this collective saving and borrowing model in the workplace because it’s “the biggest community,” Ijaha said. Credit unions also inspired them.
Initially, they ran a proof of concept with Ijaha’s former school in West London, St Charles Sixth Form College. Ijaha approached his former headmaster who “loved the idea.”
“He said, ‘Actually, we already have this issue. A number of teachers are asking me for advances on their salaries and I informally agree to do it.’ We were able to run a pilot with St Charles, we started lending with them in February 2014. We lent them up to £1,500 at a rate of up to 7.9%. We found there was significant demand to borrow.”
That helped convince Police Mutual to sign-up. Police Mutual is the mutual insurance society for the UK police.
Ijaha said: “We effectively said we would help them lend to police through their salaries and they could fund the loans by issuing a savings product. You effectively create that model where you’re borrowing and savings within the workplace.”
Police Mutual not only agreed to a pilot with Neyber, but also invested in the business and put in place a £50 million debt facility it could lend to police officers.
Ijaha says: “You’re cutting out the banks, providing much higher interest on saving products, and much lower rates. We had police who were borrowing at an average rate of around 30% — we were lending at an average rate of around 7%.”
Neyber has lent over £70 million and now works with over 80 employers, including 10 NHS trusts, DHL and Anglian Water.
Cofounder Monica Kalia told BI: “The sell in to the employer is very much around financial well-being. Typically an employer would have a range of different benefits on offer outside of just pay — bike to work schemes, childcare vouchers, gym membership.
“Actually, employers increasingly understand that they need to understand financial well-being. We have a financial education portal and the aim there is to engage people with money so they’re much better informed.”
‘We’re very, very proud really’
Ijaha wouldn’t disclose the exact breakdown between debt and equity of Goldman’s £100 million investment but said the greater part is debt.
He said the equity investment will be used to fund the development of new products, including a savings account based on salary deductions and new borrowing products.
Kalia said they are “very proud” to have sealed investment from their former employer.
“Obviously, the reputation speaks for itself. Having worked there, we know the standards that they expect. We’re very, very proud really.”
Dennis Beeson, a senior executive with Goldman Sachs Private Capital, said in a statement announcing the deal: “Employee financial wellbeing is of increasing importance to UK employers and Neyber is a key player in the evolving market. Neyber’s strong management and leading technology platform ensure its continued success.”
Ijaha said: “We spoke with the majority of providers in the market. Goldman was the most flexible and the most motivated to do a deal with us. Based on our existing relationship with Goldman, we obviously know how things work there. They did a significant amount of diligence — we’re talking six months of diligence — and were pleased with what they found.”
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