Holvi: the Finnish start-up that could spell the end for Irish chequebooks

21 May 2013

Krista Kauppinen, community manager for Holvi. Photo by Saila Semeri

Ireland is lagging behind the rest of Europe in terms of electronic payments, and Central Bank’s National Payments Plan claims a shake-up of the payments system could save the country up to €1bn per year.

A National Payments Implementation Programme was established in 2005 with the elimination of cheques laid out as one of its priorities. Yet it is now 2013 and cheque usage is still common, particularly among SMEs and consumers, which account for two-thirds of the 76m cheques and other paper-based payments issued last year.

Ireland’s persistent use of costly paper-based payments threw Krista Kauppinen, community manager for Finnish start-up Holvi, when she visited Dublin in March to host a Build A Bank workshop. “I was surprised to hear that chequing is still huge in Ireland – I didn’t expect that,” she said.

Holvi’s Build A Bank Tour has travelled to 11 countries across Europe to find out how people in different cities use their money. The reason for this curiosity is that Holvi, the completely online bank account, is making plans to stretch beyond Finland.

Rethinking banking

Holvi is banking reimagined for the digital age. Accounts can be set up in minutes and provide users with easy-to-use solutions for making and receiving online payments, such as a built-in online shop, as well as the tools for bookkeeping, budgeting and account management.

“If you have an idea for something and you want to start doing it, you can start accepting payments within a couple of minutes,” said Kauppinen, who provided a quick demo to prove it.

The service launched last August in Finland and now has more than 1,000 organisations, processing several million euro in transactions.

Every Holvi profile can be its own financial hub with multiple accounts, giving users the option of sharing some accounts with others while keeping other financial information secure and separate. Social features are enabled for these collaborative accounts and transactions are updated automatically, offering a real-time view of finances.

The founders of Holvi – Mikko Teerenhovi, Kristoffer Lawson and Tuomas Toivonen – spied a gap in the banking market that simply wasn’t being filled by more traditional institutions. “Banks have individual accounts and they have corporate accounts, but it’s a real hassle to get shared accounts,” said Kauppinen.

Holvi has been designed for use by groups or individuals that require multiple accounts under one profile. The team is hard at work building an API that can integrate with other services and be the back-end for any online service that requires money to be managed. Future plans also include PayPal-like payment buttons and physical payment cards for use in the offline world.

Finland’s start-up community

Like others at Holvi, Kauppinen has experience in event organisation and knows what it’s like trying to manage money for once-off projects. While at Aalto University in Helsinki, she became frustrated that her classmates’ hopes lied with building careers within existing organisations. Inspired by a visit to Boston universities Babson College, MIT and Harvard in 2008, where her eyes were opened up to student-run entrepreneurship initiatives like MIT $100K, she returned to Helsinki with plans to forge a start-up community among her fellow students.

She had a hand in organising Slush, which started in 2008 with 350 attendees and is now the biggest start-up conference in the Nordics, hosting 3,000 people last November. She was also involved in the first ever Rails Girls event in Helsinki and has helped to spread these female-friendly coding workshops across Europe and to the US.

In addition to experience in running events, Rails Girls also gave Kauppinen a better understanding of software engineering. “Before, I thought of everything in a marketing function way, sort of a business perspective, and [Rails Girls] got me more interested in technology,” she said. “I’m not a developer by any means, but I work with coders and I understand when they talk about technology.”

A confidence boost from Rails Girls then led to a career with Holvi in July last year. “[Rails Girls] expanded my horizons of what I could do with a start-up. It introduced me to the engineering side of that whole scene,” said Kauppinen.

Rails Girls is supported by sponsors that send the organisers money to fund the events but can’t do so to a personal bank account. For this and many other reasons, the Finnish Rails Girls organisation now uses Holvi.

Headed for Dublin

While it offers an alternative to traditional banking, Holvi is not, by legal definition, a bank. The business model is completely different as Holvi merely houses customer’s funds and does not offer other financial services, like loans or mortgages. “It’s more like banking rethought than an actual bank account. We do replace the need for a bank,” said Kauppinen.

Holvi is currently regulated as a small payment institution by the Finnish Financial Supervisory Authority (FIN-FSA), though the start-up is in the process of applying for the next level of licensing that will allow it to expand into the rest of Europe.

Setting up the full Holvi service in new markets will take time, yet Kauppinen said a lot of the technologies can be deployed internationally easily enough. “Our big advantage is we don’t have legacy systems to maintain and we can build from scratch,” she said. “We can design a flexible system that will be able to scale.”

If Holvi manages to create a Europe-wide network, a unique service offering would be accounts that can be shared internationally with ease.

The Holvi team hopes to reach new European cities by the end of this year, with its sights set on Dublin as one of Holvi’s first international markets. As an English-speaking city in the eurozone, it’s ideal.

Pilot programme

The next phase is to establish pilot users for an initial closed beta service. A return visit is planned for the summer as the team seeks to connect with freelancers in all sorts of industries, event organisers, pop-up merchants, membership-based organisations, from sports teams to hobby groups, or anyone else that thinks Holvi will work for them. “We see this as a tool for a lot of grassroots activities,” said Kauppinen.

Coming from a small home market, the Holvi team knows it has to get out to meet and talk to potential users well in advance of launching in a new market. “We see this as a tool for helping communities and helping groups of people manage their money, so we want to meet those people and understand what they’re working on – and hopefully Holvi is a good match for their needs and we can work together,” Kauppinen said.

She said she believes Dublin is replete with potential Holvi users – young, tech-oriented types who are early adopters, comfortable with online banking and in need of payment solutions for their multi-faceted interests and activities.

“They tend to have this mobile lifestyle and multiple income streams that they’ll need tools for managing,” said Kauppinen, describing the typical Holvi user. “[They’re] the type of people who tend to share resources instead of having a lot of stuff that they own. The younger generation that’s sort of building up their wealth,” she added.

Trusting online payments

A banking alternative with a tech start-up’s philosophy promises transparency and an open dialogue with users. “We’ve noticed that being open about what you want and what you want to help people achieve is usually one of the best ways to reach those goals,” said Kauppinen.

Kauppinen also said there’s a link between financial understanding and usability and this has been a key design driver for Holvi, which attempts to take the drudgery out of account management. “You can focus on the fun side of your activity as opposed to the money side, and we also think the money side could be a lot more fun, so it’s more fun overall,” she said.

Yet a cool, clean and inviting interface won’t be enough to convince users to trust someone with their finances and, for that, Holvi needs to build a trusting brand. This is why the company is making such an effort to meet with potential customers directly and talk to them about their needs and requirements. “Even if you’re building an online service, you can’t do it purely online – especially with something that’s so deep-rooted,” said Kauppinen. “People have long-standing habits in using banking, and it’s also a personal choice and seen as a sensitive topic.”

What Holvi will need to do is convince Irish people to part with their chequebooks – something Kauppinen sees as a retro novelty. “I watched American movies from the Eighties where they have a chequebook and they whip it out and it’s always a dramatic thing – I never got to do that!” she said.

A version of this article appeared in the Sunday Times on 19 May

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