UK digital banking startup Frost faced initial challenges surrounding the pandemic but launched on May 4, they have managed to build a large waitlist and will be opening to the public soon.
Frost is an intelligent account that champions automation to manage money easier through their mobile app, where customers can access accounts and complete otherwise laborious financial tasks such as switching utilities.
Frost’s algorithms are reactive to customer spending and cheaper deals, providing real-time notifications and deeply insightful in-app breakdowns. To ensure that customers are always aware of when they could be saving money and how to act on it.
Frost officially launched on May 4, 2022, and was founded by Pawel Oltuszyk and Edyta Sliwinska — entrepreneurs from tech and marketing backgrounds closely tied to banking and economics.
“From the start, we knew that we needed to learn from market leaders and build our core to create a sustainable business. Thankfully we were surrounded by like-minded people and connected with advisors early on in our journey, including Marcel van Oost, Gianluigi Davassi, Peter Ramsey, and team members who helped build Klarna and Binance,” said Sliwinska.
‘The world really needs it’
The concept of Frost was born of necessity. At Oltuszyk’s previous law firm, they dealt with money daily and witnessed the recurring issues their clients faced with high street banks or other financial institutions.
The first wave of neobanks was emerging at the time, but the Frost founders felt they only addressed some of the problems. They knew they could increase user experience using automation by helping users make better decisions in a banking app.
“Our brand and our product not only pools together their passions, but makes a real difference to people’s daily lives by addressing some of their most prevalent pain points around time and money,” Sliwinska said.
The need for Frost looks apparent when you look at the worsening cost of living crisis. According to the Insitute for Government, the rising price of energy, particularly gas at wholesale, is one of the significant factors driving inflation recently.
About half of inflation in March was caused by houses and household services (such as electricity and gas) and transport (such as motor fuels). Disruption to global supply chains has also increased prices.
For instance, semiconductors, an essential component in everyday consumer products, have been in short supply due to the pandemic closings of Asian factories.
The latest Bank of England forecast has inflation peaking at 10.2% in the fourth quarter of 2022. In addition, energy prices are expected to rise by 40% in October due to the increase of £693, or 54%, from April 1. Inflation is expected to remain high for the next two years: the Bank expects inflation to not reach its 2% target until the third quarter of 2024.
And so, “tackling the cost of living crisis is a top priority for millions. Wading through bank statements and scouring the internet for cheaper utility, mortgage, and insurance deals can help. It could save the average household £937 per year. Yet finding the time and energy to do so is another problem entirely,” Sliwinska adds.
The worst-affected households will be those with lower incomes who spend disproportionately more on energy bills. A tenth of these households spend 12% or more on gas costs, higher than the national average of 4.8%. Energy price increases will already affect this group more than others, and the April increase has further compounded this. Hence an app that focuses on utility savings could be needed more than ever.
When asked about the ideal user, Sliwinska explains, “Frost’s expansive service offering makes our e-money account equally useful for various demographics. Those who will benefit the most from us will be short on time and ready for real, straight-talking support so they can save money and meet the demands of their daily life.”
“When we asked our network which Frost feature they’re looking forward to most, 73% of respondents said spend management. That shows just how aware households are that they need to get a handle on their spending.”
Save Assist Feature
The most considerable appeal of Frost is the ‘Save Assist Feature’. To explain how it works, let’s take energy plans as an example: In most cases, banks can detect a user’s current energy provider from their transactions and then ask them to add a small amount of additional information about their plan, but much less than they’d give on specific comparison sites.
Frost automates that by identifying the monthly payments and comparing these against other deals on the market.
When cheaper deals are available, they automatically notify customers, providing an easy-to-navigate list of cheaper competitors with clear breakdowns of how much each deal will save them.
Clicking through to each deal reveals the tariff name, type, bill dates, monthly use (kWh), payment type, and general tariff details (like ‘variable rate’, ‘no exit fee’, etc.).
Should a customer wish to switch, they can do so in a couple of clicks — all they have to do is complete a few steps, confirm their information, and receive confirmation details.
The Save Assist feature focuses on helping customers switch energy providers. However, they are currently working on additional automation that extends this to cover insurance policies and remortgaging too.
The rise of super apps
According to Ernest and Young, “super apps” and greater consumer demands for personalization have strongly impacted development programs and ecosystems at banks. In the global consumer market, 27% of consumers have relationships with neobanks.
In the meantime, incumbent banks remain the market leaders, but fintechs now control more of consumers’ daily cash flow.
Speaking on this rise, Sliwinska points out, “while neobanks have given people greater visibility on spending, they lack an educational aspect that helps customers to act on it. Frost fills this gap.”
They break customers’ balances down into categories:
Melting – Money spent on the necessities
Cool – Social spending, shopping, etc.
Liquid – Anything that’s left
They then send notifications informing them when they’re overspending or have reached preset goals — giving them the added option to freeze their money.
“We’re helping busy people save time and money by giving them the ability to manage funds and save on utilities in one convenient app. We’re using smart automation alongside their current account to solve a huge problem for our customers,” said Sliwinska.
Since their launch, their first users have already started switching providers, paying their salaries, and setting up direct debits.
Sliwinska explains, “With the ability to deliver new tech-driven features and innovations, the impact we can have on users is limitless. And we’ll constantly be on the lookout for the right partners who share our vision and ambitions as we evolve our concept.”
So they plan to go further. “The problems that Frost solves are universal”, especially given the cost of living crisis. Thus, they are hoping to expand into the European and global markets beyond the initial years.”
They are raising and have some soft commitments but looking for a lead investor, and after they close the round, they will be hiring.
For now, the focus is on spreading the word, getting users to download the app, and start saving on energy bills by switching providers.
Helen Femi Williams is a freelance journalist and podcaster interested in fintech, politics, economics, and their intersections.
She is the host of the letsgetlitical podcast, a fortnightly show interviewing guests from all different sides of the political spectrum, in partnership with the Mozilla Foundation.
Prior to this role, she worked as an innovation consultant developing insurtech and fintech products and ideas for brands, startups, and major corporations.
She studied International Relations at the University of Nottingham (UK and Malaysia).