The bank of the future will be a marketplace
getmondo.co.uk
getmondo.co.uk
Or if the argument is that he plans to charge fairly for each bit of the ecosystem, he's about to learn some hard lessons in strategy.
To the author: I hope everything works out for you - but do some research first; you're underestimating your competition.
As to whether their vision of financial services takes off, I think that remains to be seen, but it's very interesting to see the large number of new banks starting up in the UK market which has previously been dominated by a few large players.
- Starling http://starlingbank.co.uk/ - Tandem https://tandem.co.uk/ - Loot https://loot.io/ - Fidor https://www.fidorbank.uk/ - Metro (been around a bit longer but still relatively new) https://www.metrobankonline.co.uk/ - Aldermore http://www.aldermore.co.uk/
Anyone tried any of the others?
Now I'm with Halifax; the customer service is no where near as good, but at least I have a Mastercard with free foreign currency transactions.
As Matt Levine keeps pointing out [2], "Tech businesses trying to disrupt finance tend to think that they are solving a technical or data or customer service problem, but the problems of finance are always and everywhere regulatory problems."
[1] https://getmondo.co.uk/faq/ [2] http://www.bloombergview.com/articles/2015-06-19/bitcoin-buc...
The last time people in the UK went looking for better interest rate on their savings they found online Icelandic banks. They put large sums of money into them (even local governments!). They apparently didn't consider that there was a reason these banks were paying higher rates than their local banks. When the banks went under and the resulting shortfall was greater than the entire GDP of Iceland, they were furious and demanded their own government "do something about it". The resulting bailout of speculators ended up costing the Treasury billions of pounds.
So I don't think the taxpayers of the UK should be all that thrilled by the brave new world of being able to move money into P2P lending schemes with one click.
The wider issue here is that high street banks (or "challenger banks" marketing themselves as equivalent to high street banks) are subject to an awful lot more scrutiny around how they advise customers to handle their finances[1]. If your differentiator from other banks is encouraging your depositors to buy into a wider range of somewhat riskier alternative lending products outside your own control, then the same people that made a fortune from arguing consumers were missold PPI and mortgages are lining up to take shots at you if and when things go wrong...
[1]considering the special privileges they get, that's the way it should be
Keep imagining. I've been working on UK mortgage software for the last few months, and it's stone age. I'm talking interfacing with a Fujitsu VME mainframe stoneage.
So it'll be interesting to see if a set of new FS companies grow up who aren't dependent on legacy systems. If they do you could see a world where they can more easily interoperate without a descent into mainframe batch land :)
It's a brave company who chooses the ground-up re-write of a core system in the banking world.
a bank that cross sells will use the revenue from lending to ruthlessly undercut this newcomer.
banks are big as the size of the balance sheet allows mind boggling economies of scale.
existing banks are probably also able to hire a team of 10 good app developers to put together a high quality app, if they thought the demand was there...
"If I put my money into Mondo, how will it be invested?"
Hugo Cornejo an employee answered with the following:
"Very good question. During the first year a very small proportion of your money will be lent to private individuals in the form of unsecured overdrafts. That’s all the lending we’re doing. The rest sits in cash at the Bank of England. In future, we will do more personal lending and invest some of the money in UK government bonds."
Unfortunately the link to this reply is only available to Mondo testers:
https://community.getmondo.co.uk/t/after-6-weeks-of-use/337/...
"What will you do with my money once you're a bank?
In year 1, a very small proportion of your money will be lent to private individuals in the form of unsecured personal overdrafts. The rest sits in cash at the Bank of England. In the future, we will do more personal lending and invest some of the money in UK government bonds."
Until they get their banking license, they're just offering rebranded pre-paid debit cards from Wirecard. From the FAQ: "We have given out the initial batch of 500 Mondo Alpha cards." "In total, we’ve got 3,000 limited edition “Mondo Alpha” cards to give out over the the next three months or so."
PSD2 / XS2A are forcing the big UK banks to offer APIs. This is good, but will mean a current account will essentially stay the same, and startups will build the services around this.
Mondo is already setup perfectly for this and has the early advantage, but startups build for users, and the users are with the big banks. I expect challenger banks to challenge, but in 10 years the big banks will have some incredible integrations which have been gifted to their customers , making them stay.
I'm very happy with the rates and transparency of TransferWise [1], and Azimo seems to do something similar but it isn't very clear how they work or what their vague claim of "best rates" means (it's not like they're the only ones that claim that).
[1] If you want to try it, with an invitation link you get your first transfer of up to £3000 for free, here's mine: https://transferwise.com/u/5d78