“If you peel away the levels of bureaucracy, governance and crap around financial services, it’s really simple,” Tom Blomfield, CEO of Monzo, tells me from the challenger bank’s new office near London’s Old Street roundabout.
“It’s just been messed up by decades and decades of rubbish that the banks have layered on. So we were just trying to simplify it, pare it back, and deliver something that actually works for normal people.”
Transparency and simplicity is key to a new era of banking, the 31-year-old claims, and he’s excited to be a part of it.
Monzo, which has some £35m in funding under its belt, has attracted more than 100,000 users since its 2015 launch. It offers a pre-paid debit card users can load, manage and monitor via a smartphone app and, just last month, the firm was also granted its official banking licence by the UK government. Now, after years of preparation, Monzo is able to roll out customer current accounts.
Blomfield is adamant his company is different to the incumbent financial institutions we know and loathe, but behind some of the public relations guff that FinTech firms appear so fond of, and behind the countless online ‘mission statements’ laden with terms like “transparency”, “democratic finance” and “customer-oriented”, just how different is it? And what about Blomfield himself – just how different is he to the hordes of City bankers working a few miles to his South? I was keen to find out.
Blomfield has always been a troublemaker, he says. After leaving his Buckinghamshire grammar school in 2003 he took his father’s suggestion to study Law at Oxford University – “I’m normally quite a contrarian, so I don’t know why I followed that advice,” – before landing a job in management consultancy.
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In an irony not always clear to their customers, many of the UK’s most prominent FinTech startups are headed by entrepreneurs who have spent much of their career in the high street banks they now seek to challenge.
British startup Starling Bank, for instance, which launched its first current account earlier this year, was founded by Anne Boden, former chief operating officer of Allied Irish Banks; while London-based app Investr was founded by Kerim Derhalli, former managing director at JP Morgan.
But Blomfield’s heart has always been in tech. Fiddling around with web design during his teen years, he built a website for estate agents Wilson Heel – “because I didn’t like delivering leaflets” – and at university helped create the website for Cherwell, his student newspaper. He went on to co-found online direct debit provider GoCardless in 2011, which has secured some $24.8m in funding to date.
Even as we speak, Blomfield’s contrarian, restless spirit rears its head, with his eyes darting around the room like those of an excited schoolboy, occasionally settling on unremarkable parts of the ceiling.
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Monzo’s commitment to customer care is what sets Monzo apart from traditional high street banks, he claims.
“All of us joined Monzo because we cared about the service being provided to customers, because we felt like we were getting a crappy, crappy service from our banks. The banks didn’t seem to care about helping us out. They cared a lot about selling financial products.”
Another difference is the low level of risk Monzo takes with its depositors’ money, he says, with only some 20% of user deposits loaned out, versus up to 100% within large high street outfits.
“[That is] part of the reason why, in 2008 and 2009, RBS and Lloyd’s both went bankrupt – they were just basically taking a lot of risk on their balance sheet.”
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One example of the transparency Blomfield frequently references is Monzo’s much-hyped overdraft policy. Blomfield in the past has sharply criticised the “hidden charges” levied by high street banks which, he says, constitutes most of the £8.7bn revenue generated annually by UK current accounts. These fees “bite most acutely when people are short of money, having lost their jobs or as a result of illness,” Blomfield has written.
Monzo, in contrast, promises to have no such hidden charges. It’s still ironing out the details and is yet to reveal how it will work out the ‘right’ amount to lend customers and what it will charge for using an overdraft, but it has pledged to not issue penalty charges to customers who go over their overdraft limits.
Not all of the startup’s distinctive qualities look set to survive, however. A popular perk of the Monzo card is free-of-charge overseas payments and ATM withdrawals, which its customers – often young, wealthy, and well-travelled – make good use of on their weekend city breaks and summer backpacking trails.
But despite Blomfield’s almost-ideological opposition to the “extortionate” foreign payment charges levied by high street banks, he cannot guarantee Monzo will not go the same way as its competitor Metro Bank, which dropped its charge-free foreign payment perk after an initial four-year honeymoon.
“Honestly, it’s impossible to say what the future will hold,” he says, “can I guarantee it’s going to be free forever? Absolutely not. But in principle we don’t gouge our customers on foreign exchange.”
With no guarantee of such popular perks remaining in place, can we be sure that Monzo’s seemingly unique ethos will survive in the face of growing revenues and expanding staff numbers? Or will Monzo become ‘just another bank’?
“I hope not,” he answers, “our ethos is we care first and foremost about the problems we can solve for customers. And hopefully we’ll keep that at the heart of the company and not turn into a big evil bank,” he jokes.
While Blomfield is quick to criticise certain elements of the existing banking industry, he claims he’s not interested in the “banker bashing” practiced by some of his FinTech competitors. Look at the website of any FinTech startup and you’ll see the same basic message – banks are bad, we are better – and many take advantage of the widespread public mistrust in large financial institutions seen since the whole system nearly collapsed in 2008. Indeed, with 83% of the UK public, according to some polls, agreeing that bankers are “greedy and get paid too much”, they’d be fools not to.
“It’s not something we play into”, he says, “I think there are companies, like TransferWise, that really do lead with that banker-bashing […] As a disgruntled customer, I talk quite a lot about my experience with my high street bank, that I have not liked. I don’t think it’s a Monzo position to go bashing the big banks though. But the levels of mis-selling, and two of them going bankrupt, certainly hasn’t helped their cause.”
As I leave my interview with Blomfield and walk back out through his newly-inhabited offices, the feeling of Monzo as the new, cool kid on the finance block returns: wearing a suit (but no tie), I am by far the most smartly-dressed person in the office, and from a quick glance around the staff, few look over 40 years old.
But, with Monzo coming to symbolise the hopes held by many young people for a ‘new style of bank’, I certainly hope Blomfield’s creation remains unique in substance – and not just in style.