October 2021 saw the fintech launch its open banking-powered QR payments service on The Hut Group’s (THG) tech platform, THG Ingenuity. The platform’s use of Mode will see QR codes as a key mode of payment for users of the group’s 30+ digital commerce merchants.

Making digital wallets de rigueur in the UK

Liu explains that she joined Mode because she shares the same vision as its founder, Jonathan Rowland, in his belief that the UK fintech scene needs a wallet ecosystem that disrupts legacy systems.

Emerging technologies such as open banking reinforce the opportunity for this. “In simple terms, we’re building a digital wallet powered by open banking. We're facilitating account to account payment between merchants and users.”

Mode’s wallet technology is built on QR codes, designed to be omni channel, and was inspired by successful examples of digital wallets such as AliPay or WeChat Pay.

A point of distinction, Liu notes, is Mode’s emphasis on Bitcoin.

Mode sees the opportunity of Bitcoin as a new form of token loyalty, explains Liu, as younger generations are less attracted to traditional membership schemes that offer discount points or airline miles.

According to KPMG, 96% of millennials believe companies should find new ways to reward loyal customers, with 68% stating that current schemes are too hard to join and/or earn rewards. 

Mode’s model capitalises on this trend, leveraging the role of Bitcoin as a store of value, to help the younger generation understand Bitcoin and cryptocurrency more generally.

"Our view is that rather than a speculative investment, Bitcoin comes into its own when held as a longer-term store of value.”

The Mode app combines payment loyalty and digital wallet on the same platform, using QR codes as the key method of payment. To encourage users to scan a QR code instead of tapping their card, Mode’s Bitcoin cashback offering sees 5% or 10% of the transaction’s value returned into their Mode wallet.

Mode is one of the only firms to have achieved FCA approval as a crypto asset firm. In June, the app became the fifth company added to the FCA’s crypto-assets register, a process which had been criticised for drawn out application delays. The register is a means to assess the anti-money laundering and counter terrorist financing processes undertaken by crypto startups.

“We're very confident we're providing a regulated and secure environment for users to interact with Bitcoin within our wallet. We're also the first LSE listed company to have that registration.”

The CryptoUK partnership represents is a strong alliance for Mode, as the trade association is focused on developing a robust regulatory framework for cryptocurrency adoption across the country.

Liu observes that “for any sector to grow and prosper in the long run, regulators and market players need to work closely together.”

She notes that Mode will be able to strengthen the work already being undertaken by CryptoUK and hopes to provide further monitoring of what’s happening in the market, in addition to offering its own expertise.

“We provide perspective and help them to work on dialogue and collaboration with our regulators and market players. Overall, we want to promote collaboration between regulators and market players.”

Building financial literacy around cryptocurrency

Liu explains that regulators are increasingly concerned about the lack of knowledge around cryptocurrency, and that young investors are particularly at risk from this knowledge gap.
A recent FCA survey found that 76% of those aged under 40 who have invested in high-risk products such as cryptocurrency and forex say they are driven by competition with friends, family and acquaintances and their own past investments.

What’s more, the survey found that while those who have invested believe themselves to be more knowledgeable about financial matters than the general public, the new research found that majority of those who purchased forex or crypto (57% and 69% respectively) incorrectly believed these to be regulated by the FCA. They were therefore unlikely to understand the lack of investor protection and the risk to their money.

Liu states that Mode, in partnership with CryptoUK, is committed to improving education not only around cryptocurrency, but to build greater financial literacy for its customers.

“The message that we are trying to get out to our customers is that we need to operate in a regulated environment and to work closely with regulators. Through our messaging around Bitcoin and our customer communications, we're educating the markets where our customers are based.”

The education extends not only to broad questions of ‘what is Bitcoin?’, but around risks associated with this type of investments, the role Bitcoin is playing in the market, how customers can safely approach it, how its underlying technology works and the monetary policy pushing the agenda forward.

“I think promoting financial literacy, together with our regulators is key among younger generations.”

While Liu believes that some Mode customers, are very educated and/or may educate themselves with materials they can find online, she feels players like Mode have a responsibility to their users.

“I do think market players are responsible for educating users, but unfortunately many companies take a short term view and don’t agree with this.”

“We however are here for the long run. We believe that we need to educate the general public, especially the younger generation, on Bitcoin and the technology and mechanisms around it. We want to build this education not only from a crypto point of view, but around investment, saving, and growing wealth. This is part of the Mode vision to help customers spend within their means and grow their wealth. Crypto and Bitcoin plays a part in this, and market players have a responsibility to assist.”

Liu is confident that the UK is on the right path however, and is positive about the efforts and track record of the FCA in their approach to promoting innovation.

Defending remarks that the FCA is moving too slowly (particularly in its approach to firms seeking approval of their crypto asset firm applications), Liu adds: “I don’t think that the regulator can be criticised for a lack of speed. Regulators want overall health, growth and prosperity of the sector. UK regulators have demonstrated that through their promotion of innovation, and I believe the FCA is well positioned to do this.”