Ask an expert: Monzo chief executive, Tom Blomfield (part 2)

Think Progress Team

Monday 11 April 2016

In the second part of our interview with Monzo’s CEO, the 30-year-old startup founder explains why financial services are ripe for a technology takeover and what his company is doing to drag banking into the 21st century.

In part 1 of our interview, Tom Blomfield spoke about how the London-based fintech startup is transforming the way in which users manage their money. Here he goes on to highlight the importance of bringing banking into the 21st century in order to remain competitive.

What is Monzo?

We’re building a new kind of bank. It’s a technology-first approach for people who want to get things done in a click on their smartphones and who don’t see the need for branches and chequebooks. Today’s banking systems are broken and Monzo is dedicated to providing a solution for people who live in the 21st century.

Our customers are anybody who has a bank account. At the moment, we’re focusing on customer acquisition. That’s why we’re doing this Alpha Programme, which has seen us partner with key suppliers to get cards printed and connected to the MasterCard network, and have just launched our first Public Beta. So far it’s been extremely successful, with more than 72,000 people on the waiting list for a Monzo card.

Why launch Monzo?

It’s simple. The banking system. The current solution, from a day-to-day finances point of view, ranges from quite painful to excruciatingly difficult. Every financial transaction hurts. And it’s unacceptable.

Everybody needs a bank account to live their life. You need one to collect your wages, to pay your mortgage, your phone bill and so on. And you’re hit with unexpected charges wherever you go. Cards get frozen on holiday and to pay someone online you need a chip and pin device. It’s ridiculous.

The problem is that banking today doesn’t serve customers. This is because the solutions are built around archaic banking systems. It’s a case of ‘these are the way our systems work and therefore you, the customer, must fit into our systems’. That’s just weird. It shouldn’t be like that at all. It should be about flexible IT systems and bending to the customer’s will and the way they live their lives. That’s how banking should be.

So why haven’t the banks embraced technological change?

The first issue is that banking technology is 30 to 40 years old. They spend billions keeping their systems alive and up to date each year. And it’s very difficult to enact change from within a bank. In fact, banks are set up to avoid change. There are policies and procedures that set out, very rigidly, how things should work. They even have change-management processes to stop change! In addition, they’ve huge innovation teams that make it very difficult to do anything new.

But the biggest problem of all is the P&L owners. They’ve optimised their business and it’s very profitable. Why should they change? They’ve reached the top of their mountain and in the distance they can see another peak – an integrated and improved IT system – which is even higher than the one they’re on at the moment. But to get there they have to first go downhill. That means cutting profits, costs and headcount, which will, in the short term, make their bank less profitable.

What are the biggest challenges Monzo faces?

The biggest problem is that by building a new banking system from the outside, you face all the same problems as those on the inside! The systems just don’t support the things you want. We’re building our own tech from the ground up and incorporating our customers’ feedback every step of the way.

And we’re working on getting our own banking regulatory licence. It’s very hard because the FSA normally only give them to bankers. But we’ve a strong team with extensive banking experience. It’s a killer team that is focused on our customers’ problems.

What are Monzo’s next steps?

We’ve a comprehensive plan in place. The biggest focus is making something that people actually want. Without that we’ll fail. And to do that we need all the operational stuff in place. Things like the banking licence application and security audits are in place. We need to pass our penetration tests with flying colours. It’s a case of watch this space.


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