Published : 4 months ago, on 31/07/2024

We recently sat down with Gregor Mowat, Co-CEO and co-founder of Loqbox, on the inspiration behind the leading financial wellbeing business, the importance of financial education, and the steps you can take to achieve financial wellbeing.

1. Tell us about your background – why are you focused on financial wellbeing and what was the inspiration behind Loqbox?

I spent 20 years working globally in public accounting with KPMG, which exposed me to the widespread issue of financial exclusion. I’ve gone all around the world, and I’ve seen the impact that it can have if the system doesn’t work in your favour. Countries like Thailand and Kazakhstan where if things go wrong, it can be devastating.

Regardless of the market, the impact of financial exclusion is significant. In emerging markets, it can be a matter of survival, while in developed markets, it causes huge amounts of pain and stress.

After leaving KPMG in 2016, I was looking to get involved in ethically-driven projects and met my co-founder, Tom Eyre. Tom’s experience working during the last global financial crisis and his personal experiences – such as his sister being denied credit despite a stable income – highlighted systemic financial exclusion that we wanted to address. 

2. Stats from the FCA say one-in-four UK adults are currently in financial difficulty, or on the brink. How does Loqbox support individuals facing these challenges?

The statistics are awful. 11.7 million adults in the UK cannot put their hands on £100 as we speak. In addition, 51% of UK adults do not have an emergency fund to cover three months of costs. What do you do if you lose your job? And then you’re adding to that the escalating cost of goods and services, and it’s only getting worse.

Loqbox’s mission is to give everyone access to a richer life. Every word in our mission is chosen carefully. The first key word is ‘everyone’: Loqbox is for everyone. We don’t want anybody locked out of the financial system or to face the stress and the pain of not understanding or being able to deal with money and therefore getting into difficulty.

The second key word is ‘richer’. We aim to help people be better off financially and live a fulfilled life, achieving their goals without money being a barrier. Most people do not want money for money’s sake. They want it to help them achieve their goals or to live the best life they can live. In some cases, they need it because they are struggling to get by and are worried about whether they can get the school uniform or pay the bills. When we say richer, we mean richer in terms of being objectively better off, but also living a more fulfilled – or richer – life. Achieving your goals without money getting in the way. That’s what we’re all about.

3. What are the steps people need to take in order to achieve a richer life?

We believe there are three key steps to a richer life:

• Firstly, understanding money. Financial stress impacts every aspect of life. Education and habit-building are crucial.
• Second: Building a good credit score. A good credit score can save substantial amounts in interest over a lifetime.
• Lastly, building savings: Start with an emergency fund and progressively enhance your savings.

4. Why is financial education so important?

Financial education is essential, but it’s often neglected. There have been sporadic attempts by the government to embed some form of financial education into the school system, as well as efforts by private individuals like Martin Lewis of MoneySavingExpert.com, for example. Noble as these are, the reality is 16 or 18-year-olds leave school not knowing what APR means, or the difference between a loan and a credit card, and crucially they often don’t understand that both have to be repaid. That’s why for Loqbox, education and habit building are always the first and most important piece of the puzzle, because without that you have nothing.

5. Tell us more about the profile of people who use credit.

Credit seekers generally fall into two categories: aspirational and desperate. Aspirational borrowers use credit to help them achieve a specific goal like purchasing a car for commuting so that they can work, while desperate borrowers may lack financial education and struggle with basic budgeting and borrow to make up the shortfall.

Understanding and managing credit responsibly is critical. For instance, a credit card can be a useful transactional tool but a costly borrowing method. Loqbox teaches responsible credit use, helping members build good financial habits.

6. Can you tell us a Loqbox success story?

We get wonderful stories – some heart wrenching stories, but they are heartwarming by the end. My favourite is a lady who wrote to us and said every year in September at the start of school she would get into a sweat about getting the new school uniform for her child. This year she took the money she had saved with Loqbox and bought the uniform. There was some money left over to spare and her credit score has gone up. Many others have rebuilt their credit scores and improved their financial situations massively.

7. How do partnerships with organisations like TSB, ClearScore, and StepChange enhance your services?

Our partnerships fall into three categories: proposition, acquisition, and ethical initiatives. For instance, TSB is one of several financial institutions that we work with. These financial institutions form one element of our proposition. We introduce our members to TSB and other bank accounts and the banks pay us a commission for these introductions. Credit score and report providers, such as ClearScore and Credit Karma, help us reach people who would benefit from improving their credit score. We also direct over-indebted individuals to partners like StepChange for debt management support where appropriate.

8. What are the different challenges faced by individuals in terms of financial wellbeing, and how can they be addressed?

Financial wellbeing needs targeted approaches. There are two distinct groups you can look at; people whose financial wellbeing suffers because they don’t engage with their finances, but who have enough money to survive, and those who just don’t have enough money.

For the first group, the answer is all about education. The habit-building we talked about before is basic hygiene, and can be more important for them than credit building. This group needs to lean into their finances and to try and use all the tools available to them. For the second group, it’s all about destigmatising a situation and getting the financial conversation going.

9. What advice would you give to someone looking to improve their financial health?

Start today. Treat financial wellbeing as importantly as physical and mental health. Money remains the leading cause of stress in the UK, but early and proactive management of finances can prevent stress and improve overall wellbeing. Integrate financial care into your daily routine, and seek help whenever needed to build a secure financial future.