UK-based money saving app Updraft has reportedly raised £16m ($21.36m) in a funding round to take on the consumer lending space in the country.

The latest investment comes from Quilam Capital with participation from angel investors and the UK government’s taxpayer-backed Future Fund, The Telegraph newspaper reported.

Founded by former HSBC banker Aseem Munshi, Updraft uses open banking data to link customer accounts and credit cards into one app.

It provides them with a payoff plan by combining their loans and debt. The company claims that it can also cut interest rates for some users by up to 50%, the report added.

Since launch, the money management app has recorded 15,000 downloads so far. It advises its users on which bills should be paid first.

Additionally, Updraft also offers credit at 19.9% annual percentage rate (APR) to pay riskier debts.

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By GlobalData

Updraft will use the fresh capital to expand into the UK consumer lending market.

It is also using open banking standards to obtain account information to allow third parties to create banking apps for consumers.

Updraft founder Aseem Munshi said: “This funding gives us the fire power to take on the UK’s spiralling consumer borrowing – and we are acutely aware how much help young professionals need right now.”

Updraft’s entry into consumer lending comes after the collapse of payday lending company Wonga, two years ago.

Updraft co-founder David Yalland said: “We are living in a difficult period, even if you take away Covid, and during this period banks are profiting heavily from crushing overdraft fees.

“And with ‘pay-later’ schemes’ it has become so easy to spend money.”

He added that Updraft aimed to offer many services to make it a “part lending, part financial planning app”.