The Wall Street banking giant Goldman Sachs has agreed to buy a stake in Trussle, a UK-based online mortgage broker, underlining the growing appetite of established lenders to invest in financial technology start-ups.
Sky News can reveal that Goldman’s Principal Strategic Investments (PSI) division is participating in a near-£14m fundraising by Trussle, which was founded less than three years ago.Details of the new investment are expected to be announced on Wednesday, according to people close to the company.Alongside Goldman Sachs, other new backers of the digital mortgage broker are said to include Propel, an investor with links to the Spanish financial services giant BBVA, which also owns a big stake in Atom Bank, the British online-only lender.The fundraising comes at a time of profound change in the UK mortgage sector as established players attempt to fend off more nimble start-up rivals, which have pledged to revolutionise the customer experience by making the process of securing a home-loan faster and cheaper.Trussle was set up by Ishaan Malhi, a City analyst who decided to launch the company after becoming frustrated with his own mortgage application process.”Every year, millions of current and aspiring home owners are subject to the same unnecessary costs, delays, and frustration that I experienced first-hand when trying to get a mortgage,” Mr Malhi said.?”These industry shortcomings are causing people’s dreams of owning a home to slip further away.”?The involvement of Goldman’s PSI unit in Trussle’s latest fundraising is notable because of the Wall Street firm’s now-frequent presence as a strategic backer of fast-growing fintech companies.In 2016, Goldman acquired a stake in Better Mortgage, a US-based residential mortgage-lending service, while in recent months, it has backed start-ups such as Kensho, a data analytics platform, and NAV, a provider of financing to small businesses.Details of the Goldman-led funding round in Trussle will come just days after the City watchdog demanded more innovation in the UK mortgage market.In a statement last week, the Financial Conduct Authority said it wanted consumers to be able to identify at an earlier stage the mortgage products for which they qualified and the ease with which they are able to compare them.Christopher Woolard, the regulator’s director of strategy and competition, said:”The mortgage market is one of the largest financial markets in the UK and there have been significant changes to the market since the financial crisis in order to ensure that we do not return to the poor practices of the past.”For many the market is working well with high levels of consumer engagement.”However, we believe that things could work better with more innovative tools to help consumers.”The FCA said it estimated that approximately 120,000 British mortgage customers would benefit from switching provider.As part of its efforts to position itself as a consumer champion, Trussle has proposed a mortgage-switching guarantee similar to that which now operates in the current accounts and energy markets.Mr Malhi has said that this would help homeowners save some of the £10bn his company claims is wasted each year by being on the wrong mortgage deal.
Confirming the investment by Goldman and BBVA-backed Propel, he told Sky News:?”We’re delighted to get the attention and investment of two globally renowned financial institutions which share our vision.
“This round of funding highlights the scale of the problem we’re solving and the ambition of our vision.
“It will be used to accelerate our growth and to invest into our product sustainably, incorporating further automation to ensure we offer the best experience possible.”?Trussle’s latest fundraising will come about 16 months after it attracted £4.7m from other investors, including the early-stage investor Seedcamp and LocalGlobe, a blue-chip backer of dozens of British tech start-ups.In total, the new round will take the sum raised by Trussle to nearly £20m.The company has declined to disclose the valuation attached to it following the fundraising that it is expected to announce on Wednesday.It also remains vague about other measures of its financial performance, although it says it has experienced month-on-month growth of 25%.Mr Malhi has set a target of providing as many mortgages as one of the six largest UK lenders – including Lloyds Banking Group and Royal Bank of Scotland – within three years.