“If the banks don’t find a way to catch up with companies offering simple service in a few quick taps, Blomfield’s prognosis is bleak.”
Everyone has a friend who’s a bit like a bank. You know the one: always smiling, keeps in touch. Couldn’t be happier to help. Usually until the day you actually need some help. Then they block your card while you’re abroad, return a direct debit, or send you more emails – only this time with more bold print and possibly mentions of the word ‘bailiffs’.
But when everything from food to furnishings are available with next day delivery in 2017, why does the everyday process of banking still feel so analogue?
“It’s a couple of things,” says Tom Blomfield, CEO of Monzo, a startup bank that’s trying to be more like the friend that you might actually call in a crisis. “One is just legacy IT. Antony Jenkins, the ex-CEO of Barclays, described the Barclays IT system [by saying] if you could take a knife and slice it, then you’d see the rings of time: the 1970s, 1980s…It’s like a giant oak tree…I don’t think [banks are] evil; I don’t think they’re trying to screw over customers. I just think they’re unable to do anything differently.”
Blomfield is candid: Monzo isn’t batting in the same league as banks on the high street yet. Where a mainstream bank has hundreds of branches and millions of customers, at the start of the year Monzo had 100,000 customers and 83 employees. But this begs the question: if Blomfield and a team of under 100 people can make banking in 2017 feel like banking in 2017 after spending only around £8 million in crowdfunding cash, why hasn’t a high street bank simply poached the industry’s best minds, thrown ten times the money at the problem, and pipped Monzo to the post?
Blomfield laughs. “I’ve had this conversation so many times with the big banks… My advice is: ‘take your brightest engineers and designers and give them this money, then tell them to go far, far away, and only come back once they’ve built something that’s going to kill the parent bank. Because if you don’t build it, somebody else is going to build it.
“But in reality what happens is they put in their smartest engineers and designers and then say, ‘Oh, we’ve just invested in this state-of-the-art payment processing system, so you’ve got to take advantage of this know-how and technology we’ve bought.’ And then they say, ‘Oh, risk and compliance just want a conversation, please, so why don’t you come here and follow our thousand different policies and procedures that are in place to govern the whole bank.’ And then, ‘Oh, the [profit and loss] owner of the current account wants this conversation about how you’re going to undercut his revenue stream.’ And before you know it: you can’t do anything. The banks need to realise that they are the problem.”
Then there’s the issue of trust. The Monzo app, the website, the interviews that the team have done to promote the bank: they all have that casual, Silicon Valley startup chumminess you’d associate more readily with music or social networking apps. But banks posing as your pal is twee. Hardly an ad-break goes by without some financial service worker – rictus gleaming, hair coiffed – promising you that whichever bank they represent really is your friend. In the near-decade since the financial crash, is anyone really still falling for the schtick? Or in the case of Monzo, can anyone be persuaded it’s different?
“I think the problem really comes when that marketing message just so obviously contradicts the service you are getting,” says Blomfield on the trust problem. For me, it’s travelling abroad. ‘Why is your fraud system blocking me? Why can’t you tell it that I’m going abroad?’ [And they reply], ‘I’m sorry, I can’t contact the fraud team; they’re in another building and I’m not allowed to talk to them.’
“I don’t think [banks are] evil; I don’t think they’re trying to screw over customers. I just think they’re unable to do anything differently”
“The marketing messages say, ‘Hey! We’re a friendly bank!’ But the systems don’t work! So I don’t care how friendly your people are: your brand is the cumulative experiences that I have with your services and your products and your people, and I’m getting hugely contradictory messages, here.”
And if the banks don’t find a way to modernise – to catch up with every other digital company that offers simple service in a few quick taps, Blomfield’s prognosis is bleak:
“I think several of them will fail, honestly. The big banks are stuck. They’re trying to do the user experience, they’re trying to do the brand, but they’re not very good at either of them, because their systems are holding them back, but they also have huge balance sheets they want to service, and they can’t offer the best prices because they’ve got thousands of staff and thousands of branches and IT systems that cost £2 or £3 billion… They’re stuck between a rock and a hard place.
“I think there’s a blockbuster moment coming for many of these banks.”