4 ms·

The bank of the future will be a marketplace

80 points by alexbilbie 11y ago

deleted 11y ago
[deleted]
_lex 11y ago
Seems like a particularly poor article. The title is an unsubstantiated claim based on the author's passion project, rather than any sort of real analysis. Ok, so banks do loss-leaders and cross sell. SO does your supermarket, payroll provider, and many, many other businesses. Yes, that means that the things they cross sell will be more expensive because they have to subsidize other parts of the business - but without that entry point to the customer, they'd be paying google and all sort of other marketing companies to deliver customers for each segment of the business - and they'd have to overcharge to fund that marketing as well. 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.
- raesene4 11y ago
  I'm not sure I'd class Mondo as a "passion Project" they're a company with a product in alpha (payment card) and in the process of getting FCA accreditation, which requires quite a bit of work to get started on... 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.
  - alexbilbie 11y ago
    Aside from Mondo and Atom Bank who else is there?
    - deleted 11y ago
      [deleted]
    - raesene4 11y ago
      There's quite a crop, some of the ones I've seen so far - Starling http://starlingbank.co.uk/ http://starlingbank.co.uk/ - Tandem https://tandem.co.uk/ https://tandem.co.uk/ - Loot https://loot.io/ https://loot.io/ - Fidor https://www.fidorbank.uk/ https://www.fidorbank.uk/ - Metro (been around a bit longer but still relatively new) https://www.metrobankonline.co.uk/ https://www.metrobankonline.co.uk/ - Aldermore http://www.aldermore.co.uk/ http://www.aldermore.co.uk/
      - ultimatejman 11y ago
        and Moven https://www.moven.com/ https://www.moven.com/ - Curve http://www.imaginecurve.com/ http://www.imaginecurve.com/ Osper (kids bank) http://www.osper.com/ http://www.osper.com/ - Secco http://www.seccobank.com/ http://www.seccobank.com/ granted, osper, moven and curve are not much more than prepaid cards
      - iaskwhy 11y ago
        I have been a client of MetroBank since a few years ago and just love it. My recent experience with Aldermore has also been nice. Anyone tried any of the others?
        aembleton 11y ago
        I was very happy with MetroBank until I moved away from London; they don't have a branch in Manchester yet. Also, their debit card now charges for purchases outside of Europe so they would charge me for AWS purchases. 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.
        mst 11y ago
        My Halifax branch staff have always been wonderful; fortunately for me, said branch is five minutes' walk from my office so I can basically go via there when walking into town to scavenge lunch. Otherwise, yeah, YMMV.
  - _lex 11y ago
    I'd hope he's passionate about his business. I think you may have thought that I meant passion project as in "small, unimportant thing he's passionate about". I meant "thing he's passionate about". I think YC is probably sama's passion project.
blibble 11y ago
so if Mondo's going to only provide a current account: what are they going to do with their customer's deposits? just leave them sit as cash doing nothing? 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...
- alexbilbie 11y ago
  Someone recently asked on the Mondo Community forums "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/337/2 https://community.getmondo.co.uk/t/after-6-weeks-of-use/337/...
- pbsk 11y ago
  from their FAQ[1]: "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." [1] https://getmondo.co.uk/faq/ https://getmondo.co.uk/faq/
sharemywin 11y ago
I thought it was going to be an article about how p2p lending was going to take over everything: car loans, mortgages, payday, equipment finance, small business loans, merchant cash advance, factoring, debt collection, credit cards, pawn shops.
osullivj 11y ago
"If you have some money left over at the end of the month, imagine being able to move it into a P2P lending platform with one click. Or being able to choose a mortgage from any one of a number of providers based on your previous spending habits and income." 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.
- elorant 11y ago
  Why do you think that's happening? Didn't anyone bother to build something decent or is the market hostile towards change?
  - raesene4 11y ago
    Traditional banks are very risk averse and have large investments in older tech. It's a brave company who chooses the ground-up re-write of a core system in the banking world.
  - osullivj 11y ago
    A lot of banks & building societies built mainframe systems to run mortgage businesses in 70s. They're still running on them, and don't want to bear the cost of transition. When the housing market is buoyant they transact and make money, so a system overhaul isn't a priority. And when times are bad, there's no money for that kind of project. As for the software vendors serving this sector, that's another story...
    - spking 11y ago
      This has been my experience after 7 years on the IT side of the financial services industry. I worked at one of the top 10 commercial banks in the US and within the last 3 years they abandoned a multi-year migration project to a real time infrastructure. Many huge banks still run Tandem systems.
- raesene4 11y ago
  One of the more interesting aspects of Mondo is from their blog they appear to be building their software stack from the ground up, as opposed to taking the approach of other new banks and buying in/white-labelling core systems from established providers. 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 :)
vegancap 11y ago
I've been proudly using my Mondo account/card for a week now. So pleased with it so far. Definitely worth checking out.
- aembleton 11y ago
  What are the advantages of it over a current account from a big bank?
bradleyjg 11y ago
"If you have some money left over at the end of the month, imagine being able to move it into a P2P lending platform with one click." 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.
- aembleton 11y ago
  It's not that far off one click already. I can set up Zopa to lend out money, then just transfer money with `1 click` from my current account.
  - notahacker 11y ago
    Agreed, transferring money to lending accounts is pretty easy anyway going by direct to the P2P provider. 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
ultimatejman 11y ago
The title is right. 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.
bernardlunn 11y ago
Free loss leader with upsell describes the Freemium model - what is wrong with that?
namenotrequired 11y ago
He mentions TransferWise and Azimo. Does anyone have experience with Azimo, maybe to compare to TransferWise? 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 https://transferwise.com/u/5d78
ArkyBeagle 11y ago
This is like saying "the battery of the future will be a transistor."
dodders 11y ago
Only, Mondo isn't even a bank, yet. From the FAQ [1], "your money will be held in a separate, protected account by Wirecard, our issuing bank". 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/ https://getmondo.co.uk/faq/ [2] http://www.bloombergview.com/articles/2015-06-19/bitcoin-bucket-shop-kicks-bucket http://www.bloombergview.com/articles/2015-06-19/bitcoin-buc...
inthescript 11y ago
The only real alternative to a UK bank that has actually launched and actually works is Monese. 20,000+ app installs in under 4 months since launch and an active community of users http://www.facebook.com/mymonese http://www.facebook.com/mymonese http://www.twitter.com/mymonese http://www.twitter.com/mymonese with plenty of reviews to read here https://play.google.com/store/apps/details?id=com.monese.monese.live&hl=en_GB https://play.google.com/store/apps/details?id=com.monese.mon... Euro accounts will also be landing this year, and transfers to a range of European currencies are supported at just 0.5% !! Plus the account is currently free !!!!
narutouzumaki 11y ago
Interesting...

80 points by alexbilbie 11y ago

deleted 11y ago

[deleted]

_lex 11y ago

Seems like a particularly poor article. The title is an unsubstantiated claim based on the author's passion project, rather than any sort of real analysis. Ok, so banks do loss-leaders and cross sell. SO does your supermarket, payroll provider, and many, many other businesses. Yes, that means that the things they cross sell will be more expensive because they have to subsidize other parts of the business - but without that entry point to the customer, they'd be paying google and all sort of other marketing companies to deliver customers for each segment of the business - and they'd have to overcharge to fund that marketing as well. 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.

raesene4 11y ago
I'm not sure I'd class Mondo as a "passion Project" they're a company with a product in alpha (payment card) and in the process of getting FCA accreditation, which requires quite a bit of work to get started on... 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.
- alexbilbie 11y ago
  Aside from Mondo and Atom Bank who else is there?
  - deleted 11y ago
    [deleted]
  - raesene4 11y ago
    There's quite a crop, some of the ones I've seen so far - Starling http://starlingbank.co.uk/ http://starlingbank.co.uk/ - Tandem https://tandem.co.uk/ https://tandem.co.uk/ - Loot https://loot.io/ https://loot.io/ - Fidor https://www.fidorbank.uk/ https://www.fidorbank.uk/ - Metro (been around a bit longer but still relatively new) https://www.metrobankonline.co.uk/ https://www.metrobankonline.co.uk/ - Aldermore http://www.aldermore.co.uk/ http://www.aldermore.co.uk/
    - ultimatejman 11y ago
      and Moven https://www.moven.com/ https://www.moven.com/ - Curve http://www.imaginecurve.com/ http://www.imaginecurve.com/ Osper (kids bank) http://www.osper.com/ http://www.osper.com/ - Secco http://www.seccobank.com/ http://www.seccobank.com/ granted, osper, moven and curve are not much more than prepaid cards
    - iaskwhy 11y ago
      I have been a client of MetroBank since a few years ago and just love it. My recent experience with Aldermore has also been nice. Anyone tried any of the others?
      - aembleton 11y ago
        I was very happy with MetroBank until I moved away from London; they don't have a branch in Manchester yet. Also, their debit card now charges for purchases outside of Europe so they would charge me for AWS purchases. 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.
        mst 11y ago
        My Halifax branch staff have always been wonderful; fortunately for me, said branch is five minutes' walk from my office so I can basically go via there when walking into town to scavenge lunch. Otherwise, yeah, YMMV.
- _lex 11y ago
  I'd hope he's passionate about his business. I think you may have thought that I meant passion project as in "small, unimportant thing he's passionate about". I meant "thing he's passionate about". I think YC is probably sama's passion project.

blibble 11y ago

so if Mondo's going to only provide a current account: what are they going to do with their customer's deposits? just leave them sit as cash doing nothing? 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...

alexbilbie 11y ago
Someone recently asked on the Mondo Community forums "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/337/2 https://community.getmondo.co.uk/t/after-6-weeks-of-use/337/...
pbsk 11y ago
from their FAQ[1]: "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." [1] https://getmondo.co.uk/faq/ https://getmondo.co.uk/faq/

sharemywin 11y ago

I thought it was going to be an article about how p2p lending was going to take over everything: car loans, mortgages, payday, equipment finance, small business loans, merchant cash advance, factoring, debt collection, credit cards, pawn shops.

osullivj 11y ago

"If you have some money left over at the end of the month, imagine being able to move it into a P2P lending platform with one click. Or being able to choose a mortgage from any one of a number of providers based on your previous spending habits and income." 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.

elorant 11y ago
Why do you think that's happening? Didn't anyone bother to build something decent or is the market hostile towards change?
- raesene4 11y ago
  Traditional banks are very risk averse and have large investments in older tech. It's a brave company who chooses the ground-up re-write of a core system in the banking world.
- osullivj 11y ago
  A lot of banks & building societies built mainframe systems to run mortgage businesses in 70s. They're still running on them, and don't want to bear the cost of transition. When the housing market is buoyant they transact and make money, so a system overhaul isn't a priority. And when times are bad, there's no money for that kind of project. As for the software vendors serving this sector, that's another story...
  - spking 11y ago
    This has been my experience after 7 years on the IT side of the financial services industry. I worked at one of the top 10 commercial banks in the US and within the last 3 years they abandoned a multi-year migration project to a real time infrastructure. Many huge banks still run Tandem systems.
raesene4 11y ago
One of the more interesting aspects of Mondo is from their blog they appear to be building their software stack from the ground up, as opposed to taking the approach of other new banks and buying in/white-labelling core systems from established providers. 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 :)

vegancap 11y ago

I've been proudly using my Mondo account/card for a week now. So pleased with it so far. Definitely worth checking out.

aembleton 11y ago
What are the advantages of it over a current account from a big bank?

bradleyjg 11y ago

"If you have some money left over at the end of the month, imagine being able to move it into a P2P lending platform with one click." 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.

aembleton 11y ago
It's not that far off one click already. I can set up Zopa to lend out money, then just transfer money with `1 click` from my current account.
- notahacker 11y ago
  Agreed, transferring money to lending accounts is pretty easy anyway going by direct to the P2P provider. 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

ultimatejman 11y ago

The title is right. 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.

bernardlunn 11y ago

Free loss leader with upsell describes the Freemium model - what is wrong with that?

namenotrequired 11y ago

He mentions TransferWise and Azimo. Does anyone have experience with Azimo, maybe to compare to TransferWise? 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 https://transferwise.com/u/5d78

ArkyBeagle 11y ago

This is like saying "the battery of the future will be a transistor."

dodders 11y ago

Only, Mondo isn't even a bank, yet. From the FAQ [1], "your money will be held in a separate, protected account by Wirecard, our issuing bank". 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/ https://getmondo.co.uk/faq/ [2] http://www.bloombergview.com/articles/2015-06-19/bitcoin-bucket-shop-kicks-bucket http://www.bloombergview.com/articles/2015-06-19/bitcoin-buc...

inthescript 11y ago

The only real alternative to a UK bank that has actually launched and actually works is Monese. 20,000+ app installs in under 4 months since launch and an active community of users http://www.facebook.com/mymonese http://www.facebook.com/mymonese http://www.twitter.com/mymonese http://www.twitter.com/mymonese with plenty of reviews to read here https://play.google.com/store/apps/details?id=com.monese.monese.live&hl=en_GB https://play.google.com/store/apps/details?id=com.monese.mon... Euro accounts will also be landing this year, and transfers to a range of European currencies are supported at just 0.5% !! Plus the account is currently free !!!!

narutouzumaki 11y ago

Interesting...