Major banks ‘facing ruin’
THE boss of challenger bank Monzo has warned that major British banks face ruin as they are swept away by new technology.
Tom Blomfield, Britain’s youngest bank chief executive at 31, believes the British banking system is broken.
Mr Blomfield said: “I think many of the big incumbents right now will die. They have not kept up to date and they are technologically bankrupt.
“With Brexit and the spectre of negative interest rates they [the banks] have retrenched,” he added. “I have heard that many of these digitisation projects have been cut.
“Each of the banks has an innovation team or a digital lab, but they are kind of for show. When things get a bit rocky, they get their funding cut and they go back to getting the basics right.”
Mr Blomfield is hoping Monzo, which was recently granted its banking licence with restrictions, will help shake up the industry when it officially launches in six months time.
The start-up bank, which was recently rebranded from Mondo, has no branches and encourages customers to manage their accounts on a smartphone. It aims to steal the march on the big banks by offering customers greater control over their money by alerting them when they are close to going overdrawn, allowing them to freeze their card at will, and automatically detecting when you have travelled abroad without having to call up a branch.
The challenger will start with around 150,000 customers when it begins rolling out current accounts in spring 2017.
It aims to make money by charging customers a small fee for loaning them money when they go beyond their overdraft limit. But in the long term, Monzo will also look to drive up revenues by operating as a marketplace for financial products and taking referral fees.
Mr Blomfield said the bank was eyeing a million customers by the end of 2017. “I think there is space here to build a company the size of Google or Facebook in personal finance. That is our aspiration,” he added.