Listen over at techcrunch to Monzo founder Tom Blomfield talking about building a ‘smart’ bank, fintech bubble, and turning down an acquisition offer from a major bank.
Tom Blomfield on building a ‘smart’ bank, and turning down an acquisition offer from a major bank - TechCrunch interview 📻
This has been raised in another post so it’s worth noting - Tom explanation for this was:
"We have the chance to do something really really different, we have the chance to build this smart bank that improves the lives of millions of people, around, not just the UK but around the world.
And we may not accomplish that but I know for sure, we definitely won’t accomplish that if we sell out to another bank. That’s the fate of simple.com or Fidor…we have similar aspirations [to Fidor’s original goals] & the way to ensure we will not meet those aspirations is to sell out.
You can’t rule it out, right? It’s the bailout plan, if stuff doesn’t go well, sure some like BBVA is sitting in the wings to acquire you. It means you haven’t accomplished what you set out to do."
“It’s never just the money, the money comes with strings and they’re really, really onerous so I think starting a bank is capital intensive, absolutely no argument there. There is a lot of capital available [that’s] relatively cheap. Certainly last year and even this year, for the best companies there’s still plenty of capital around so I don’t think that’s a big problem.
Taking money from a bank is not just an investment, it comes with all sorts of other crap, like they say ‘hey, we’ve just got this amazing new system from, you know - pick your IT vendor - you’ve got to leverage our capability in this’ or you’ve got a risk & compliance department or ‘legal want to have a meeting with you about how you can fall into our T’s & C’s’.
It’s all that baggage, it’s not just legacy IT, it’s legacy culture and legacy thinking. It just stops you taking risk, fundamentally, stops you innovating, that’s the real problem.”
Will Monzo eventually be bought by a legacy bank?
This was a really interesting interview when the question about current account launch was asked I was on the edge of my seat
Excellent interview and really fascinating responses.
The one part I did understand was when Tom referred to current accounts having a network effect, and therefore limiting the number of banks that would be successful (to around two). I don’t really see how accounts have a network effect. As long as there continue to be inter-bank payment standards, I don’t care what bank my friends or family use.
I agree that Monzo and others need a certain scale to allow for profitable operations, but with 80 million customers out there, it seems there’s room for quite a few banks. Maybe I was just misunderstanding this point. I found it intriguing and would love to know more!
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