Our investment in Yonder

Now ubiquitous, credit cards first became a part of our lives in the 1950s. Fueled by post–World War II economic expansion, the “Diners Club” emerged — a glamourised, lifestyle accessory for an increasingly affluent US consumer.

In 1951, Times magazine wrote, “unlike other mortals, the 42,000 members of the Diners’ Club need never pay the waiter when they wind up a spirited evening on the town. They simply sign the check, get billed once a month”. For this “magical experience”, members are charged $3 per year.

Fast forward 70 years and 2.8bn of us have a credit card, generating one of the highest margin, $104bn revenue lines for banks and card companies.

And yet, compared to other parts of consumer fintech, credit cards remain remarkably stubborn to innovation. All the more remarkable given how fundamentally poor the product and experience is.

Painful application processes using archaic credit scoring systems, dark patterns designed to trick consumers into paying more interest than they need to, and convoluted rewards programs designed to be confusing and return little value back to customers.

Surely there must be a better way? Thankfully there now is and its name is Yonder.

It’s fair to say when we first met Tim, Theso and Harry, we brought with us a degree of scepticism around the card industry. Surely plastic forms of payment were increasingly irrelevant? Wasn’t BNPL and other more “innovative” forms of credit going to kill the industry?

But their vision was much bigger than the card industry.

They described a world where financial services are fair and conscious, and the stress of debt is eliminated for everyone. By fundamental redesigning underwriting, why should the legacy mindset of traditional credit products like cards, mortgages and loans even exist? Why not rebuild the concept of credit from the bottom up, a flexible product which grows as you grow and your lifestyle, needs and location change?

Despite this bold vision the inevitable question of “why now” followed. One answer was shared by the founding team — tech and regulation. Open Banking created an entirely new and far more nuanced way of underwriting risk and minimising fraud (tracking at $30bn per year). On top of this, a tech stack from new players like Marqeta, Modulr and our own Weavr now made it possible to build entirely new infrastructure.

The second answer was derived by us. Part of the reason it’s been so hard to build credit card disruptors is the breadth of skills required, from underwriting, collections, fraud, regulation, debt structuring and not least, consumer DNA. For three cofounders to cover so many bases was indeed rare. Their ability to hire exceptional individuals to complement their skills only gives them greater talent defensibility.

And it’s not just the underwriting, tech and customer experience which has been rebuilt. So too has the concept of ‘rewards’. Inspired by their experiences as professional expats moving to London (and frustrations with being declined credit), Yonder’s Local Experiences are a curated set of the city’s best dining, sporting and social experiences. Delivered in-app they also offer much more generous cashback value than typical card rewards programs.