@tom’s just taken part in the latest FinTech Insider podcast, which you can listen to here.
Yesterday’s topic was Bank Business Models: The Last Bastion of Innovation & they cover a lot in the hour!
Innovation isn’t having an app – it’s having a new business model. Yet for banks, business models are one of the hardest things to innovate around. We discuss what’s broken with traditional bank business models, and how to create new ones, with two people who know best: Tom Blomfield, CEO of Monzo, and Dora Ziambra, Head of Business Development at Azimo.
“For me, and many people in the industry, being a marketplace bank is the future,” Tom says. “It’s a customer interface that acts as a platform for all of your financial problems. So a single interface that gives you access to the Azimos and the Funding Circles and the Transferwises, with a delightful, one-click user experience, but still giving you the benefits of that choice and that customer service. So, sort of, looser recoupling around APIs.”
Tom’s as vocal about the problems with traditional banks as always 
Here’s my summary 
of what’s covered
- Why bank’s business models are broken & under attack
- The pressures on revenues, now that investment banking is decreasing
- Legacy bank’s mentality towards customers are wrong and needs to be reversed
- Impact of regulation & PSD2 on the legacy bank’s business models
- The loss of trust in banks, following the financial crisis
- Pressures on banks to maintain revenue
- New FinTech’s approaches to offering products
- Current accounts, as an example of an unsustainable product
- Banks know their charges are wrong / bad & how they were established
- The tension between innovation that benefits the customer & making revenues for the legacy banks
- The Challenge for legacy banks that want to change but would take a hit on their revenues in the short term
- Marketplace banks & why they’re needed
- Implications of an aggregator existing for the new FinTech company’s services vs lots of separate FinTechs, for a legacy bank
- The pivot that legacy banks would have to make, in order to become a marketplace bank & the potential business models
- Why they might not adapt
- What are customers saying they want?
- Transparent fees, rather than ‘free’ banking
- Ease of use
- Removing the anxiety & stress involved in managing money
- Why it’s not necessary to charge a fee to provide a current account with no hidden fees or charges
- How can a legacy bank do this & why they don’t
- Marketplace banking as a sort of sharing economy for banking
- Ultra efficient balance sheet lenders
- Customer numbers & the accelerating pace of customer adoption - will it happen in banking?
- The significance of data for FinTechs & how it’s used
- Whether a bank will be the aggregator
- What banks can learn from other industries & tech companies in particular
- The importance of culture & rapid product development, that’s led by engineers (Tom maintains Monzo’s Ruby library!)
- Giving employees autonomy to make decisions vs management by committee & why people are afraid to take responsibility