‘Challenger’ chief warns major banks face ruin in face of new technology

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, warning that customers will also lose out as the Brexit vote forces major lenders to scale back their innovation investment and focus on staying afloat.

He claimed that a new generation of financial institutions will glean greater prominence in the market with the advent of new technology.

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. That will catch up.”

He added: “With Brexit and the spectre of negative interest rates they [the banks] have retrenched. I have heard that many of these digitisation projects have been cut. It’s just back to being inward looking and focusing on staying solvent.”

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 the spring of next year. The start-up bank, recently rebranded from Mondo, has no branches and encourages customers to manage their accounts on a smartphone.

It aims to steal a march on the big banks by offering customers greater control over their money by alerting them when they are nearly overdrawn, allowing them to freeze their card at will and automatically detecting when they have travelled abroad without having to call up a branch. The challenger is due to start with about 150,000 customers.