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Big Interview: Thomas Cook Money taking a start-up mentality to tech and growth

Posted by Lee Hayhurst on
Big Interview: Thomas Cook Money taking a start-up mentality to tech and growth

Anth Mooney, managing director of the travel giant’s new financial services division, tells Lee Hayhurst about his vision of creating a new holiday financial services industry driven by technology and an agile approach

In the automotive sector financial services is a bigger driver of profits than building and selling vehicles, and estimated to be worth $4.79 trillion each year globally.

Travel has an even closer affiliation with finance than the car manufacturing sector as foreign exchange is inextricably linked to the retailing of trips and holidays.

And yet there isn’t there an equally vibrant financial services industry in travel, a sector that also enjoys high, but more regular, sales values and benefits when clients budget properly.

This is something Thomas Cook is determined to change having established a new standalone division within the group; Thomas Cook Money.

Cook brought in Anth Mooney, former Virgin Money director of financial services, to revitalise a division now enjoying a renewed focus on technology, innovation and growth.

He has been in situ for 15 months and this week saw the first major new product launch of his tenure when Roam, a mobile-first travel insurance brand, came out of beta.

However, that is set to be one of a number of initiatives Thomas Cook Money will roll out as it looks to make the budgeting and financing of holidays easier and more convenient for customers, while developing a new revenue stream for the travel giant.

Mooney said: “What attracted me to this opportunity was the chance to build something from scratch, to reboot the financial services business within Thomas Cook.

“It’s feels like a start-up opportunity but at the same time you are working with a brand that’s been around for 175 years with a long history in financial services and 20 million customers and distribution across Europe so there’s an opportunity to scale it.

“Whether it was travellers cheques or pre-paid currency cards in the past, there’s always been a sense of innovation, but the opportunity to bring that back but in a different way was what swung it for me.”

Thomas Cook has always had a significant foreign exchange business with around 10% of the UK market and three million customers.

But it was very much a face-to-face in-store proposition and the challenge was to become more digital, more convenient for customers and more flexible.

Mooney, who inherited a team of just six working in financial services at Cook’s London HQ, has seen that grow to 50 as it developed its own in-house tech platform so it can adopt an agile approach to developing prototypes quickly and testing them with real customers.

“We spent the first three or four months trying to work out what we wanted to be. The mentality had been let’s build a range of financial services products and try to cross sell them to our holiday customers.

“Our ambition is to do a lot more than that. We do not want to be a bank per se, but we have started to focus on financial services for holiday customers. So we formulated an idea of a set of services that helps customers plan and give them the biggest bang for their buck.

“We have to make sure we are doing this properly and we have great partners to help us do that. The last thing you want is for your customer to become overleveraged.

“If you think about a world in which a customer has a facility in place which they can draw down on flexibly to pay for holidays and travel, from a consumer point of view that’s very attractive.

“We have to find a way that makes economic sense for the consumer and it’s at a really great price. And we need to make sure we are at the vanguard from a technology point of view because if we are not keeping up with what’s going on in the world around us someone will eat our lunch.

“There is a huge shift in how people buy an pay for products and we need to make sure what we do is fit for purpose in today’s world, we need to be on the front foot all the time, perhaps be a little braver than we have been in the past.

“We have to accept that sometimes things will not work first time. But that’s the mentality of a start-up, that’s the test and learn mentality that we are adopting here.”

Mooney said holiday customers typically spend more than they can afford, but after food and shelter the holiday is considered the most important spend of the year.

He said when he was at Virgin Money there were customers who used mortgages to pay for their holiday so keen were they to protect that area of spend.

This presents a clear opportunity for Cook to help customers better manage their budgets, said Mooney.

“There is almost a unique opportunity for Thomas Cook Money to play in that space” he said. “We want to help customers have more, happier and better holidays by removing some of the pain points.

“We are thinking about making it easier, about saving money to pay for the holiday, about borrowing and then protecting themselves when they are away through insurance.”

Modern cloud computing and API connectivity aligned with a new European regulatory environment pushing for a more open banking sector, means it is easier than ever for firms to establish a new financial services brand.

As a result digital banks like Monzo and Revolut have emerged as challengers to the High Street’s big five and they have found one of the main use cases for secondary bank accounts is consumers planning for big budget items like travel.

This has not gone unnoticed at Cook which in Sweden is testing Sumo, a self-service current account platform it has built in partnership with Nordics technology business Ferratum.

Multi-currency and integrated with travel insurance, Sumo can be set up in five minutes simply by taking a photo on a smartphone of a driving licence, and offers a range of ways customers can save for their holiday.

Mooney said by working with a licenced partner to take a “regulatory light approach” Sumo was “spun up” in just six months at a cost of just half a million pounds. Cook plans to roll Sumo out in the UK towards the end of this year.

A third product in the Thomas Cook Money portfolio is Lyk, its multi-currency pre-paid card that Cook is migrating onto it own platform from Mastercard’s to give it more flexibility.

“We have sold these for quite a few years quite successfully but it was a standard product using their (Mastercard’s) standard platform and did not give us much flexibility in terms of developing the product,” Mooney said.

Developments Cook is considering for Lyk include broadening its use beyond just the two-week holiday and providing multi-cards for families so parents can provide their children with spending money in a controlled environment.

Lyk, which was launched in test form at the end of last year and rolled out to Cook’s 600 UK retail stores in March, also represents a financial services product that positions Cook as a provider of sound money-saving advice to its clients.

As well as providing low-cost ATM withdrawals overseas and contactless payments, it offers real-time transaction tracking and free currency exchange through a Lyk app and if lost or stolen can be switched off and quickly replaced.

Mooney said: “Fifteen months in, we are pretty confident that the propositions we are building are resonating with customers and we feel we have a big opportunity to do something for customers that previously did not exist.

“Alongside the business in China [where Cook has a joint-venture with Club Med owner Fosun] financial services is part of Thomas Cook’s overarching strategic drivers for the business.

“We need the technology capability to take advantage of that and we have the data that allows us to capture customer insight and understand more about them as they do more with us. Data is a key part of any financial services business today.

“If we were to have continued to try to do this in the old-fashioned way trying to cross-sell at the point of sale and through traditional marketing messages that would be really tough. There is a lot of learning for us as a business but we are taking our time and taking sensible steps.”

Mooney added that unlike in the automotive sector the holiday finance space was “empty” but one that Cook has a “right to play in”.

“We are designing this for travel and making travel the use case for a modern financial services business. Today there is no such thing as a holiday money or holiday banks like there is in the automotive industry.

“Over time as we broaden out the proposition and start to add additional services you start to create an eco-system of services you can embed in the customer journeys that we have.”

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