New financial app to be trialed in Scotland

A new app offering interest free salary advances is being trialed in Scotland - in the hopes it could get rid of the need for payday loans.

Karma - which allows employees £300 monthly with zero interest - is being supported by ethical investor Fortunis Capital.

They can use the advance to purchase goods and services at retailers - in person and online - including the likes of Tesco, Asda, Morrisons, Waitrose and Amazon.

The Scottish Government has welcomed Karma, with Innovations Minister Ivan McKee describing the company as a “fintech (financial technology) seeking to solve a major societal challenge”.

Karma has also been supported by the FCA sandbox programme which tests new products in a regulatory framework.

CEO Minck Hermans said: “We have built not just a solution, but are starting a global movement, to disrupt the short-term consumer loan market and eradicate the pain this causes.

“Employers are rewarded with increased productivity and employee engagement, plus the recognition that they are doing the right thing; employees are empowered with more control of their finances; and our retail partners are rewarded with more business. Everyone wins.

“This will end the necessity of people relying on crippling short-term loans for essentials, or to meet unexpected costs, in order to bridge that gap before payday.

“Concerns around money are at the forefront of the minds of employees across the UK. Karma can provide that safety net of support without the worry, stress and anxiety.

“Karma empowers people with confidence allowing them to manage their finances, with resultant physical and mental well-being benefits.

“Our completed tests in Scotland have proved to be hugely positive, as has the initial reaction from Scottish agencies and the tech sector.”

Fortunis Chief Operations Officer Justin MacRae said the initial ambition is to deploy up to £500million a year. Fortunis invests in the fintech, greentech, bio and medtech and wellness sectors.

Mr MacRae said: “Fortunis is built on fundamental core values: we believe in innovation over exploitation. Our investors share the same ethos, the same mission. Innovation is where you will find us.

“We support disruption and change for the better. We pursue the adoption of new ways of thinking, always asking the same questions: how do we improve the situation? How do we make this better?

“We only invest in technology and solutions that have a great team and come to us with a problem worth solving that creates a positive change for society.

“Karma joins the industry-accredited fintech cluster in Edinburgh, where it has found a depth of talent, an open and collaborative environment with the University of Edinburgh’s Bayes Centre and positive reaction from government groups.

“With Scotland open to attract technological investment in the nation’s social capital, this is the perfect environment for ethical fintech companies such as Karma to flourish.”

Ivan McKee, Minister for Trade, Investment and Innovation, said: “Scotland has a worldwide reputation for attracting innovative businesses such as Karma and providing them with the opportunity to grow and prosper.

It’s a pleasure to welcome Karma here, particularly as a fintech seeking to solve a major societal challenge and make lives better for people in Scotland, and across the globe.”

The Home Office said: “As a Home Office approved Endorsing Body, Fortunis Capital have endorsed Karma to be based in the UK through the Innovator Route.

“The Home Office Start Up and Innovator Routes actively encourage innovative, scaleable and commercially viable businesses to be based in the UK, in support of our economy.”

Head of Fortunis strategy in Scotland is Edinburgh-based David Russell Consulting.

Founder David Russell said: “It has been a real pleasure providing strategic connections to Fortunis Capital over the last few months. Karma perfectly fits the mould of a typical Fortunis investment.

“It is a company which will grow and succeed on a commercial level and will benefit Scotland, its people and its economy.”