UK digital-only bank Mondo received a restricted banking licence last week and can now hold up to £50,000 ($65,000) in customer deposits and connect to live payments networks to test its systems.
This means that it no longer has to rely on prepaid cards loaded with funds held by a third party as it did previously. In order to obtain a full banking licence, Mondo must prove that its systems are stable and conform to regulatory standards in the next 12 months. The bank outlined its plan to meet these requirements in a blog post this week:
- Hiring. Mondo plans to hire heads of compliance and risk, likely in an attempt to reassure the Financial Conduct Authority (FCA) that it has the requisite knowledge and experience to run a bank.
- Connecting to payments networks. The bank can now build connections to payments networks including MasterCard, Faster Payments (for instant payments), and Bacs (to enable direct debits and standing orders).
- Upgrading its Android app. Much of Mondo's attention so far has been on its iOS app. It now plans to roll out its Android app to more users and upgrade the functionality to match that of the iOS version.
- Raise money. To achieve the above steps, Mondo needs to raise capital. It plans to raise £15 million-£20 million ($19 million-$26 million), as first reported by Business Insider in June, with a large portion of that coming from crowdfunding.
Mondo's decision to launch a live product before getting a licence may help it succeed. The bank has been sending out 1,000 cards a week since March, and there are 35,000 people on its waiting list. This means that it already has a loyal customer base to transition to its banking product once it has a full licence. And since the product has been live for months, it's been developed and refined with customers' input. This may help Mondo capture market share and provide it with an edge over other digital-only banks in the UK including Starling, Atom, and Tandem — none of which yet have a live product in the hands of customers.
We’ve entered the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.
No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages of the new fintech revolution.
The battle already underway will create surprising winners and stunned losers among some of the most powerful names in the financial world: The most contentious conflicts (and partnerships) will be between startups that are completely reengineering decades-old practices, traditional power players who are furiously trying to adapt with their own innovations, and total disruption of established technology & processes:
- Traditional Retail Banks vs. Online-Only Banks: Traditional retail banks provide a valuable service, but online-only banks can offer many of the same services with higher rates and lower fees
- Traditional Lenders vs. Peer-to-Peer Marketplaces: P2P lending marketplaces are growing much faster than traditional lenders—only time will tell if the banks strategy of creating their own small loan networks will be successful
- Traditional Asset Managers vs. Robo-Advisors: Robo-advisors like Betterment offer lower fees, lower minimums and solid returns to investors, but the much larger traditional asset managers are creating their own robo-products while providing the kind of handholding that high net worth clients are willing to pay handsomely for.
As you can see, this very fluid environment is creating winners and losers before your eyes…and it’s also creating the potential for new cost savings or growth opportunities for both you and your company.
After months of researching and reporting this important trend, Evan Bakker, research analyst for BI Intelligence, Business Insider's premium research service, has put together an essential report on the fintech ecosystem that explains the new landscape, identifies the ripest areas for disruption, and highlights the some of the most exciting new companies. These new players have the potential to become the next Visa, Paypal or Charles Schwab because they have the potential to transform important areas of the financial services industry like:
- Retail banking
- Lending and Financing
- Payments and Transfers
- Wealth and Asset Management
- Markets and Exchanges
- Blockchain Transactions
If you work in any of these sectors, it’s important for you to understand how the fintech revolution will change your business and possibly even your career. And if you’re employed in any part of the digital economy, you’ll want to know how you can exploit these new technologies to make your employer more efficient, flexible and profitable.
Among the big picture insights you'll get from The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry:
- Why financial technology is so disruptive to financial services—it will soon change the nature of almost every financial activity, from banking to payments to wealth management.
- The basic conflict will be between old firms and new—startups are re-imagining financial services processes from top to bottom, while incumbent financial services firms are trying to keep up with new products of their own.
- Both sides face serious obstacles—traditional banks and financial services firms are investing heavily in innovation, but leveraging their investments is difficult with so much invested in legacy systems and profit centers.
- Meanwhile, startups are struggling to navigate a rapidly-changing regulatory landscape and must scale up quickly with limited resources.
- The blockchain is a wild card that could completely overhaul financial services. Both major banks and startups around the world are exploring the technology behind the blockchain, which stores and records Bitcoin transactions. This technology could lower the cost of many financial activities to near-zero and could wipe away many traditional banking activities completely.
This exclusive report also:
- Explains the main growth drivers of the exploding fintech ecosystem.
- Frames the challenges and opportunities faced by incumbents and startups.
- Breaks down global and regional fintech investments, including which regions are the most significant and which are poised for the highest growth.
- Reveals which two financial services are garnering the most investment, and are therefore likely to be transformed first and fastest by fintech
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The Fintech Ecosystem Report: Measuring the effects of technology on the entire financial services industry is how you get the full story on the fintech revolution.
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