Monzo CEO: Big banks hunt down and ‘kill’ innovation
Founder of British fintech unicorn takes aim at institutional rivals
Tom Blomfield, the founder and CEO of the British fintech unicorn Monzo has criticised his established competitors in the banking sector such as HSBC and Barclays for their aversion to risk and dependence on outdated technology.
In a recent interview Blomfield stated: “Banks are set up to prevent change basically. A lot of the systems inside the bank — particularly risk and compliance functions — are there to stop things changing. Because if things change it creates risk. And so, they’re like these antibodies that go around hunting out change and trying to kill it.”
Accusations of aversion to disruption are perhaps unsurprising from the head of one of the financial industry’s best-known disrupters. Founded only five years ago, the leading ‘neobank’ now has more than 3.5 million users and a market value of $3.5bn (£2.7bn, €3.2bn), thanks originally from crowd-funding but in large part to injections from venture capital funds.
Monzo was able to steal a march on traditional banks by capitalising on the latest developments in smart-phone technology and focussing on a user’s day-to-day payment processing rather than credit cards, mortgages and loans.
Indeed, Blomfield observed: “The banks really focus very hard on their existing set of financial products.”
Some more established banks have set out to make up for lost ground, but to varied levels of success. JPMorgan’s digital banking app, Finn, did not take off and was closed down in 2019, while RBS has recently launched Bo, a standalone digital bank.
It would seem that, in Blomfield’s eyes, these larger banks are damned if they do and damned if they don’t: “How do you transform that whole thing? I think it’s very, very tricky,” he said. He criticised recent institutional attempts to modernise, arguing that the banks “send them off into a trendy office with exposed brickwork, Converse and Ping-Pong tables.”
While the Monzo chief’s criticism of slow-to-innovate banks may resonate with some, others have argued that a focus on regulatory compliance and aversion to risk is not a bad thing when dealing with customer’s hard-earned cash.
Indeed, the start-ups desire to disrupt and be close to its userbase is a double edged sword. In recent months the Monzo has come under increased scrutiny. The BBC’s Watchdog programme investigated accusations that accounts were being randomly frozen with users temporarily locked out of their funds.
While the Guardian recently revealed that the independent online complaints resolution service Resolver has had more than 700 complaints about Monzo in little over a year, with the number of complaints accelerating in recent months.
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