The founders behind pocket money app SquareOne have rebranded as Emerge, a fintech company with a focus on rectifying what they perceive as a “broken landscape” within the business accounts and expenses market.
Jovan Pavlicevic and Jamie Jermain are currently jumping from the land of pocket money to supporting small and medium-sized businesses (SMEs) through a new business costs management app, with the pair’s long term goal to become a challenger bank later down the track.
Monday saw the launch of Emerge’s offering for SMEs through its app. Through it, Pavlicevic and Jermain say Emerge users are able to generate cards for all business transactions.
This simplifies processes like expense claims and impose limits and controls for team purchases, ranging from travel expenses to petty cash and corporate gifts, the pair say.
Emerge, which is a registered financial services provider, doesn't offer loans, interest, credit or overdrafts which all retail banks in New Zealand offer. However, Pavlicevic says Emerge is still subject to the same rules and regulations as retail banks in terms of knowing its customer and customer due diligence.
“When you look at the rest of the world, we are probably 20 years behind a lot of developed nations [in terms of banking] and a lot of people find that quite jarring when they arrive in NZ,” Pavlicevic tells interest.co.nz.
“The SME sector in particular is a massive powerhouse of our economy. We know that we're heading into recessionary times and that SMEs are the backbone of the country and we wanted to do something to support them, to make their lives easier, empower kiwi businesses to help keep things moving.”
By using Emerge for business expenses, businesses can bypass the paperwork, bank queues and length of time to set accounts up that Pavlicevic and Jermain say SMEs can run into at the big banks. Pavlicevic and Jermain add they’ve had the benefit with Emerge of starting from scratch and going the digital way first.
They escape the migraine that banking giants would have to deal with when updating old processes built on decades-old technology – which is incredibly difficult due to their size and profitability, Pavlicevic says.
“That’s where we're able to see a massive gap and capitalise on that.”
Emerge secured a $5.8 million seed extension round in late 2023, led by Auckland venture capital firm Altered Capital, with extra backing from Enterprise Angels and Angel Investors Marlborough and a partnership with Mastercard for integration in over 200 countries.
“The market goes up and the market goes down, and that was a challenging time to be raising,” Pavlicevic says.
“What we're hearing now is that things are certainly bouncing back which is nice and bodes well for us.”
Megabanks and neobanks
Emerge is currently free to use, with no account fees and zero costs apart from $10 per physical card ordered.
“We’ve seen that taking the friction out of banking is key,” says Jermain. “So actually being able to set up an account for free and having access to a card and virtual cards and being able to do those basic things for free is really important.”
Emerge will potentially build in new products and features later on. Currently, the focus is on streamlining the customer experience and setting up base accounts and cards without any fees.
Pavlicevic and Jermain says Emerge works together with “megabanks”, with all customer funds held in an ANZ account inaccessible to Emerge.
However, the company wants to evolve into a “challenger bank” down the track, offering apps, software, and other technologies to streamline mobile and online banking for kids, business owners, and soon, individuals.
Jermain says Emerge is conscious of the fact that getting towards banking registration isn’t something that's really been done in New Zealand before by a fintech company.
“There isn’t a neo challenger here that's gone from startup to banking registration. And so for us, it's all around open dialogue with the regulators. We're talking to the Financial Markets Authority, we're talking to the Reserve Bank,” he says.
“We're working with them to figure out what that path might look like for us. It's obviously really important that we’re where we need to be for our age and stage.”
In March, the Commerce Commission released its draft report on retail banking competition in New Zealand which found the country's four largest banks dominate personal banking services without facing significant competition.
“Our preliminary view is that New Zealand’s four largest banks – ANZ, ASB, BNZ and Westpac – do not face strong competition when providing personal banking services. There are limited constraints from outside the four major banks, and competition between the majors is sporadic,” the Commission wrote in March.
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