Holistic education services provider, Cohort Solutions, continues to expand its global reach, announcing that its payment platform Cohortpay now offers local payment options in 60 countries across Europe, Africa, Asia and North and South America.
Additionally, Cohort Solution’s 15,000 strong user base is set to accelerate with the newly added capability of servicing students studying in New Zealand.
Cohortpay offers significant savings to some 600,000 international students enrolled in Australia each year by allowing students to make tuition payments in their local currency and converting their AUD dollar tuition fees at a significantly lower foreign exchange rate while eliminating extra international money transfer fees from the equation.
“Some of our students studying medicine in Melbourne for example, are paying over AUD$75,000 per annum for a four-year course,” CEO Mark Fletcher (pictured) explained.
“When compared to costs charged by their banks at home, some of these students are saving over AUD$11,000 using Cohortpay.
“With these sorts of savings in mind, we expect a successful expansion into the New Zealand market will bring exciting growth, with payments already being enabled and future deals in the making.”
Students can also track their payments in real-time via a personalised dashboard.
Who are the people behind Cohort Solutions?
CEO Mark worked as a solicitor at one of Australia’s top legal firms, Minter Ellison, before moving into banking in 1998. He has over 15 years’ experience in banking in London and New York with Credit Suisse and with Bank of Queensland in Australia.
During these roles, Mark was in senior positions leading teams of staff that were responsible for managing many of the financial risks of these banks, including foreign exchange trading, retail interest rate trading and day-to-day liquidity management.
Co-founder Paul Jones has over 12 years’ commercial software development experience across a wide range of fields. He has worked for both large companies and small start-ups in a variety of technical roles. He built first commercial software application at 15 to manage generating report cards for a local high school.
Since then, Paul has been responsible for a number of innovative products that have been sold to various different clients, including:
- Architecting a new trading platform for a UK based commodities trading company;
- Developing the user authentication and reference data import features of the international VocaLink Euro Clearing System project; and
- Developing an app for identifying popular content based upon social user interaction (such as Twitter, Facebook and on-site comments). This product was sold to large US media organisations such as WWE, USA Network, ABC (US), NBC and Advance.
How Mark and Paul met, started and funded Cohort
Shortly after starting, Mark and Paul met at River City Labs (RCL), a co-working space for startups in Fortitude Valley, QLD. Mark was in need of a technical lead and Paul was looking for his next opportunity.
They just happened to be working on their individual projects across the desk from each other. Paul was continually offering his advice and expertise and it just made sense to join forces.
“A lot of credit needs to go to RCL, the vision of Steve Baxter, who subsequently became an investor, and what has been achieved at RCL,” says Mark. “Without RCL we would not have had the kick start to the business in the same way that we have.”
He revealed that to date, Cohort has been funded by the Australian Government, together with a small handful of angel investors (including Steve Baxter) and most significantly by Vix Investments.
Vix is a global Fintech investor specialising in the payments sector. Vix and their significant shareholder, LSE listed Utilico Investments Limited (LON: UTL) have been associated with many successful listed and unlisted payments, and fintech businesses globally.
Other current and recent Vix portfolio investments in the payments sector locally include the recently ASX listed Touchcorp (ASX: TCH), on-line identity verification experts Vix Verify, mobile recharge and payments provider Fusion Payments, omni-channel payments processing solution provider Mint Payments, virtual card payments processor Optal, and transport ticketing / payments solutions provider Vix Technology.
Mark gave us a well detailed interview about his steadily growing company – why he started it as well as what and how exactly they are doing so far. Below is what he had to share with Anthill.
What inspired you to start Cohort Solutions?
During my time in banking, I was responsible for various foreign exchange trading portfolios. Having worked alongside and had many conversations with international students, it became very clear that there was an opportunity to help these students with their international payments and in turn save them thousands.
Given the networks that he had built up over 15 years in the legal profession and banking industry I believed I could offer students studying in Australia a significantly reduced foreign exchange margin to that which they currently receive with their current retail bank.
At the time, international education was Australia’s third largest export sector, behind only coal and iron ore, with over 500,000 international student enrolments annually. The opportunity was huge with over $10 billion in payments annually.
With the size of the opportunity, the right experience and the potential value to customers, it just made sense to try and solve the problem.
What gap in did you set out to fill with Cohort?
Initially, the idea was to help international students pay their tuition fees in their home currency. Typically, international students that we had spoken to were frustrated with the fees charged when they were making an international payment and the exchange rate that they received.
While most people are aware of the foreign exchange rate shown on the TV or in the papers, the reality is that these rates are only available to banks that trade with each other. Despite international students often paying $25,000 p.a all the way up to over $300,000 for a 4-year medicine degree, international students still receive a retail foreign exchange margin when transferring their funds.
In the case of a US student, while the AUD might be worth USD70c, their retail bank might charge them 73c to convert their USD to AUD to pay their fees. This means, instead of their course costing USD$210,000 in their home currency, it actually costs them USD$219,000 or an extra $12,850+ in AUD. On top of all of this, students need to pay for an array of telegraphic (wire) fees for this process.
Our view was that we could offer students a significantly lower foreign exchange margin and charge no fees. With the contacts that we have in the banking industry, and therefore the preferential rate that we could receive, we would still make money and save the students thousands of dollars each.
What exactly does Cohort Solutions do?
While the initial problem as detailed above was to provide a payment solution for international students, subsequent to this, we have realized that there are a significant number of gaps in the entire international education sector that have a need for solutions – hence the name Cohort Solutions.
Subsequent to launching the payment product, it became very clear that we could use our experience and domain expertise to provide streamlined solutions for the business stakeholders.
We therefore created two business management solutions that targeted at the international education agents that recruit students to international education providers and to these education providers that teach the international students.
Cohortflow for Agents is a business management system and workflow solution. This tool tracks the lifecycle of a student from initial contact through to graduation and beyond.
This cradle to the grave solution ensures that students are provided with the best possible services and communications through the life of their study experience.
Cohortflow for Providers is an agent management system for education providers that simplifies the entire administration, reporting and payment processing management of their network of global agents.
Given the interaction between these two key business stakeholders in the international education sector, developing these separate yet interrelated management systems, has proved to provide synergistic benefits to both parties. These systems have now become a key focus for the organisation.
Who are your competitors? Challenges?
Our main competitors are in the payments space.
Given the type of product that we offer, typically our competitors are very large corporates – it is usually the likes of the retail banks in the student’s home country or generic money service businesses like Western Union.
We believe our advantage lies in the fact that we are solely focused on international education. For our competitors, international students are just another client that they can make money from. While we also make money from our business, the value we give back to our customers is often very significant and as detailed above can save students well over $10,000 over the life of their degree.
In terms of the business management systems, the key issue we face is not really competition, but more apathy or inertia. What we have developed will save time and money for our customers. However, despite a very light touch implementation requirement, partners always have concerns when engaging new IT systems.
As with all our other products, information is the key. We spend a lot of money and time early in the product cycle engaging with stakeholders to ensure the product is right. Given the sector is a quite tight-knit, we have found that once we start to get moment our products and services are recommended to other institutions.
How is Cohort Solutions doing so far? What next?
Since inception, Cohort Solutions has now serviced over 15,000 students from more than 140 different countries, studying at almost all institutions in Australia that offer international education.
We now have staff in 9 countries, have commenced offering our services to the New Zealand international education market and we are in the process of recruiting for staff in Europe and North America to offer our solutions to these markets as well.
Given the markets we operate in, obtaining an Australian Financial Service License (AFSL) from ASIC in Australia and being licensed as a Financial Service Provider in New Zealand as been defining.
Obtaining these is a very arduous and costly process and brings with it significant compliance and resource overhead in running our business.
On the flipside, having these and the associated compliance, funding and audit structures in place has provided a significant change in dialogue with some of our larger customers.
In 2014 we were recognized for innovation and entrepreneurship by the Australian Government and received a grant under the Commercialisation Australia program.
And in 2015 we successfully received nomination as part of the Australian section of Ernst and Young’s global “Entrepreneur of the Year” awards.
With growing confidence and awareness of the Cohort brand, we envision users will adopt multiple complimentary products tailored to international students, including health insurance, short-term accommodation, transportation, and a mobile sim card, to maximise their savings and ease their transition into a student’s life in Australia and New Zealand.