Blomfield wants to make Mondo the Google or Facebook of banking with accounts as easy to use as email. Photo / Bloomberg
Blomfield wants to make Mondo the Google or Facebook of banking with accounts as easy to use as email. Photo / Bloomberg
On a sweltering afternoon in July, Tom Blomfield emerges from Bank of England offices in the heart of the City of London and promptly sheds his suit jacket.
The 29-year-old chief executive of Mondo, a startup smartphone bank that's applying to operate in Britain, isn't the suit-wearing type.
Blomfield and his team have just spent two hours getting grilled by eight regulators from the Bank of England and the Financial Conduct Authority, Bloomberg Markets magazine reports in its October issue.
The officials quizzed them on how Mondo will attract customers and remain financially viable.
After poring over Mondo's 250-page submission, which included details of its capital and liquidity plans, the group pressed Blomfield on why he wanted to run a bank.
"They said he didn't look like a typical banker," recalls Mondo chair Denise Kingsmill who, as a member of the House of Lords and a former deputy chairwoman of Britain's Competition Commission, added a touch of gravitas to the presentation.
Blomfield told them: "I want to run a new type of bank."
When he's not trying to charm regulators, Blomfield shows the kind of passion - and irritation - it takes to build a bank from scratch. His catalogue of complaints about big lenders is familiar to most consumers: hours of paperwork to open an account or apply for a loan, exorbitant fees for using your credit card abroad, onerous overdraft charges and clunky mobile apps.
Blomfield wants to make Mondo the Google or Facebook of banking with accounts as easy to use as email.
"We are targeting a demographic that values being able to do everything over a mobile phone in five seconds," he says.
If Mondo gets the BoE Prudential Regulation Authority licence it could - as early as next year - begin taking deposits and lending money.
Should Mondo pass muster, it might thank Chancellor of the Exchequer George Osborne. He's overseen the regulatory revamp that's made it easier for startup banks to get off the ground. Osborne has said he wants to make London the "fintech capital of the world". In March, he said the BoE should grant at least 15 new licences in the next five years.
Such innovation looks long overdue. Britain's big four banks - Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking - control 77 per cent of its 65 million personal cheque accounts. Only 60 per cent of customers say they're satisfied with their bank, an Accenture survey last year found.
When Metro Bank opened in 2010, it was the first new retail bank British regulators had authorised in 100 years - and it took them almost two years to okay it. Today, Metro has more than 500,000 customers, and deposits surged 188 per cent to 2.9 billion ($6.87 billion) last year.
The application process is now simpler - for both physical banks such as Metro and digital ones like Mondo. Under BoE and FCA rules, a new entrant can hold as little as 1 million in capital initially. An applicant needs common equity Tier 1 capital of 4.5 per cent of risk-weighted assets, significantly less than the 9.5 per cent required under the old rules that still apply to existing banks.
Since the regulatory changes in 2013, 13 banks have won licences. In June, Atom Bank became Britain's first digital-only lender to secure approval, six months after it formally applied. It expects to open accounts next year, focusing on a mobile app to target small and medium-sized businesses and consumers.
While technology has changed our lives, Blomfield says consumer banking has stayed frozen in time. Banks offer customers a static list of deposits and withdrawals rather than providing timely updates or useful tools to analyse spending or saving. In a world of instant messaging, many lenders don't communicate in real time. Blomfield's current (unnamed) bank took two weeks to alert him he'd overdrawn his account by 800 and then charged him 20.
"The banks have their hands in your pockets constantly, taking money out."
The Mondo app is designed to tell you if you mess up. It lets you set up real-time notifications that say how much you've spent daily or whether you're going into overdraft. If you need 500 to tide you over to payday, Mondo will tell you how much it will cost for a short-term loan instead of charging you after the fact.
With the right technology and open-minded rules, Blomfield says, even as staid an industry as banking can be disrupted.
Sci-fi suit morphing into a sci-fact suit
Mitsui and its partners are working on a mechanised suit like the one worn in 'Aliens'. Photo / Bloomberg
Businesses are having trouble finding enough workers when labour conditions are harsh. Tomoya Tsutsumi
In the Hollywood blockbuster Aliens, Sigourney Weaver battles the alien queen in a mechanised suit akin to a wearable forklift. Director James Cameron resurrected the idea for Avatar some 23 years later.
Science fiction, right? Maybe not for much longer.
Mitsui, best known among investors as Japan's top oil and iron-ore trader, says it is on the cusp of developing a device very similar to the one worn by Weaver.
In two years, Mitsui and its partners aim to release the next iteration, complete with mechanical arms and legs.
Further out, future versions could start to take on Aliens-like proportions.
The commodities trader and its partners have built a wearable suit - a backpack fitted with belts and leg supports - that enhances a user's ability to lift and move heavy objects.
The idea is that when worn by farmers, or at nursing homes or construction sites, strength is enhanced.
The 6kg Assist Suit AWN-03 was developed at ActiveLink, Panasonic's robot-development unit. The suit allows the wearer to lift as much as 15kg without stressing the lower back, according to Mitsui, which demonstrated the outfit to the media at its Tokyo headquarters.
It says such a machine is tailor-made for Japan, where labour shortages and a shrinking and ageing population are already causing construction delays.
"What we have in mind is the Aliens power loader," says Tomoya Tsutsumi, an official at Mitsui's construction and industrial machinery division.
General contractor Kajima and Yamato Holdings, which offers door-to-door parcel delivery services, are among dozens of companies planning to try the technology, according to Tsutsumi.
The target is to sell 1000 units in the initial year after the Assist Suit's release.
"Young workers tend to want to work in a more comfortable environment," Tsutsumi said, "so businesses are having trouble finding enough workers when labour conditions are harsh."
