Meet Moven, the non-disruptive challenger bank

FusionWire, June 2016.

 

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Meet Moven, the non-disruptive challenger bank

Is it actually necessary for challenger banks to re-invent the wheel? No, says Alex Sion, co-founder of Moven. We went to New York to learn how Moven is making waves in the US as a next generation bank that doesn’t actually hold money.

What if, instead of building an app-focused bank, you built a great banking app that could be used by anyone, regardless of where their accounts are?

That’s what Moven has done. Alex Sion, co-founder and Managing Director, is the first to admit that Moven is technically more of a customer experience startup than a bank – but even so, the Moven experience is an impressive imitation of a bank. After linking up their existing accounts, US customers use the Moven app to manage all their money, and even spend it with a Moven-branded bank card. “Moven is structured as a programme manager that sits on top of a bank,” says Sion. “Basically, we orchestrate the banking experience.”

I’ve met the Moven co-founder in New York, in a non-descript Midtown office building across the street from Madison Square Garden. Inside, the office very much looks the part of a startup, down to Sion’s company hoodie with “Spend, Save & Live” written across the chest. 47 people work for Moven right now, says Sion, who co-founded the company alongside Brett King in 2012.

“We always had a vision that the future of banking was going to be an app. But that’s different from saying that banks need apps,” says Sion. To explain what he means by this, Sion points out how banking apps are different from other apps because you need to have the product before the app is any good to you. You wouldn’t download the HSBC banking app unless you already bank with them – what would be the point? This, the Moven founders thought, needed to change:

“If banking is to become an app, the app needs to have a value proposition just like every other app.” He lists them off: “This is the app that helps me find restaurants. This is the app that helps me buy clothes. This is the app that helps me play music. So we thought, the value proposition of banking in the future is: this is the app that helps me build better spending habits. This is the app that guides me to save, and helps me to buy the stuff I want in smart ways.”

The commerce link
This is the reason why Moven is more about the experience of banking, rather than the nuts and bolts of holding money. The fact that customers don’t have to leave their old banks to join Moven means the company is less of a disruptor to the established financial providers. But this also means Moven has sidestepped what’s arguably a fundamental tenant of banking. To date, Moven has raised over $24 million in funding, most recently in a $12 million round led by Route 66 Ventures in October. Does Sion think the fact that Moven doesn’t hold the money could become a drawback as the company grows?

Sion admits this issue is something they think about, especially now that the fintech startup landscape is maturing. Four years ago, any kind of new bank was a bold move, but that’s a long time ago in the startup world: “People are pursuing the same ideas now, but in more aggressive ways.” But Sion is quick to add that the fundamental idea behind Moven is sound: “[When we launched,] we believed the important part was the experience layer – banking itself would remain largely the same.”

If you ask people what banking is, says Sion, they’ll say it’s a place that holds money securely, moves it about, and gives yield and credit. “We believed banking products weren’t going to transform that much. What was dramatically going to change, was how people experience money. … What you needed to do, was build an experience layer that would tightly connect to the infrastructure of money. That would be the redefinition of banking. You don’t require a charter to do that.”

This is an interesting approach to the task of building a challenger bank: the idea that you don’t need to build from scratch, as the new banking experience can sit on top of the existing system. It also negotiates a fundamental problem faced by challenger banks: that people are notoriously reluctant (or too lazy) to move current accounts. “The challenge with fintech, and neobanking in general, is that it’s hard to underestimate centuries of history when it comes to the sensitive of money. Habits aren’t going to change overnight. But what is changing rapidly, is behaviors toward commerce,” says Sion. “For us, that had nothing to do with banking.”

The fact that people are experiencing commerce in new ways, via the likes of Amazon and eBay on mobile phones, means we’re expecting the same levels of ease from banking, says Sion – but banks haven’t stepped up to fill that gap: “To me, that gap is the threat and the opportunity that we can solve. There’s the massive behavioral shift that’s central to how consumers engage with their money.”

A visual approach
So what does this solution look like? Sion opens the Moven app on his phone, and swipes around while explaining how it works. The app is surprisingly simple-looking, using visuals to monitor spending (green means on budget, red means having gone over), and to motivate to reach savings goals (tap three times to “break the glass” and access the cash). “We simplified it as wants versus needs. Wants are discretionary items. Needs are non-discretionary. It’s colour-coded.” Sion taps into the restaurant category. “Here’s my dining out: I’m $404 above typical. If I want to see why, I can see that was because of Mother’s Day. I could dive in deep.”

The app also lets Sion see what he’s spent on his American Express card, as Moven becomes a hub for everything to do with spending money. But the home screen on the app isn’t your usual current and savings account balances, because Moven doesn’t focus on accounts – it focuses on behaviour: “This is organised around a vision: this is the app that helps me build better spending habits, and guides me to save and buy something I want.”

The lifestyle element of Moven starts from the moment Sion enters the app: he doesn’t actually have to log in. “I’ve enabled it to recognise the ID on my phone. We did that because there are very few lifestyle apps on your phone that require you to log in every time.” Banks take a black and white approach, says Sion: either you’re logged in and can access everything, or you’re outside and can see nothing. With Moven, you can look at basic information without a password, only requiring one when it comes to doing things like transferring funds.

Global ambition
Moven has started moving beyond the US, currently operating in New Zealand in partnership with Westpac, and in Canada in collaboration with TD Bank. Moven in Canada operates as TD My Spend, a companion app to TD Bank’s regular app. “It’s like Facebook and Facebook Messenger: they are separate apps, but they’re completely integrated.” Yes, they’re considering the UK, says Sion: “Commerce and its behaviors do not discriminate by geography. We have very ambitious plans to drive growth. … We’re poised, in this calendar year, to break a million people using the Moven experience.”

Over the coming year, Moven’s plans are to continue to expand its partnerships with banks: “We’ve got a healthy pipeline of opportunities to do that, and to expand by geography.” On the consumer side, it’s all about broadening the product line: “We started out with a basic focus on what consumers would consider spending, and we now monitor savings habits too. Further out – I don’t like to use the word credit, because credit is just spending. Spending money I don’t have, basically! But we’re going to continue down the expansion pipeline, to the point where we’re full-service. You’ll soon be able to get every experience from us that you currently get from a full-service retail banking operation.”

Anne Boden takes flight with Starling Bank

FusionWire, 2015.

Screen Shot 2015-10-22 at 12.36.43Anne Boden takes flight with Starling Bank

At the heart of the new mobile-only Starling Bank is Anne Boden, whose experience and conviction may just be the thing to create a brand new current account.

Anne Boden isn’t starting a bank – she’s starting a revolution. At least that’s how she’ll make you feel after spending an hour in her company, discussing the next-generation Starling Bank in her animated and energetic manner. This is a mobile-only bank, but there’s a lot more to it than that, and Boden will tell you all about it. Or more precisely, the CEO will ask you questions about your bank experience to make you realise that you’re not happy with it, not one bit – you just haven’t been able to articulate it before, because you didn’t realise it could be any other way.

We’re sitting in Starling’s offices, currently found in the duller parts of Clerkenwell behind a door with no sign. The bank is still in startup mode, says Boden, who started Starling in January 2014. They won’t provide details about funding, but right now they’re building their stack and getting a banking licence, with the launch set for next year. But before we get to that, I have to ask – why is Boden doing this? She’s had almost 30 years’ experience in banking, working herself up the ladder in a number of household names before becoming Chief Operating Officer at Allied Irish Bank. Life must have been pretty comfortable?

Boden looks at me for a moment before bursting into laughter, thrilled. “You’re the first to actually ask this!” She thinks for a bit. “Somebody said to me, ‘You’re trying to prove that the current model is broken and it’s possible to do something really different.’ A lot of people have this concept, but I have the execution capability,” asserts Boden. To put this in context she takes me back to the beginning, to after she’d graduated from computer science and chemistry at Swansea and joined Lloyd’s Bank in the early 1980s. “I was in a branch for a couple of months, doing my traineeship. Then I became one of the architects of the CHAPS system. I went to Standard Chartered and was Head of IT and Operations. I became a consultant, I did an MBA, I went front-of-office. I joined UBS and went to Zürich. I went into a big insurance company and started doing lots of work with boards. I went to work for ABN Amro Bank as head of transaction banking for EMEA, and joined RBS [when it] bought ABN Amro. Then the financial crisis happened.”

The reason Boden is telling me all this is partially to illustrate how she has a lot of experience in an industry that’s rich with rules and tradition. But the world changed after the financial crisis, and Boden realised this when she would go and give advice to RBS clients: “I was in a big corporation, running thousands of people and billions in budgets, but [here were these] start-ups, creating huge amounts of customer value for hundreds of thousands. This shocked me! I realised I was learning more from them than they were learning from me.”

New ways of thinking about banking
Boden spent a year talking to people all around the world about what they were doing post-crisis, and what was happening in technology. She joined Allied Irish Bank after their bailout and successfully applied several of the things she’d learned there. “But there were things I couldn’t do. I spent my summer holiday in 2013 going around the world, talking to big banks. And I came to the conclusion that everybody had the same problem: they were moving transactions from branches onto mobiles, but the technology wasn’t coping with how people were using it.” So once Christmas rolled around, Boden had made a decision: the only way to really fix things was to start from scratch. There were three factors making this possible, she says: the regulation for getting a banking licence had changed; people were ready to do much more banking on their phones; and the technology was there to enable it.

But, I ask, did she do this because she wanted to, or did she feel there was genuinely no other way? “All of a sudden, it was as if all these forces were coming together. There was nothing else I could do. I could see the problems big banks had, I could see that technology was enabling it, that the regulations had changed. And I could do it!” She laughs. Other people had the idea too, she adds, but it’s not a simple thing to do: “You have to be able to run a bank, to start a bank. You also need to be creative and have courage. So I thought to myself, ‘I want to do this’.”

Back in the present day, Starling Bank has finished its architecture, its big picture plans, and is working on the “detailed discussions” about functionality. The app exists, confirms Boden, but she hesitates when I ask if I can see it: “We haven’t really shown anybody our app!” She looks at me for a moment, before deciding to show me a little bit. She opens the app on her phone, talking me through the quick sign-up process. She lists a number of things the app can do, many of which are intriguing – but it’s still kept under wraps so let’s just say the app will have lots of links to other parts of your life, to help you plan and organise.

“You shouldn’t be asking people what they want from their banks, because it doesn’t get the right answers. So instead you ask, ‘Would you mind talking about the accounts you have and how you use them?’ […] People are trying to find ways around the system,” says Boden, explaining how people will do things like move cash around to avoid getting stung with fees. “What we’re trying to do, is solve people’s everyday problems with money.” Take how we’re used to being charged when direct debits bounce: “But Google doesn’t charge you when they reject spam. It’s a transaction, so why should you be charged?” She looks at me, clearly knowing what I’m thinking: that this comparison makes sense, yet it’s not at all how we’re used to thinking about banking.

The start-from-scratch advantage
While it’s clear that Starling wants to make technology work for people, rather than the other way around, I still can’t help but wonder: why can’t the existing banks do this? “Okay. You have all these things available in the rest of your life, so why don’t they exist in banks?” The problem, says Boden, is that standard banks are serving multiple customer groups, selling not just current accounts but also savings, loans and mortgages. All these systems are interconnected, and they’ve been consolidated over many years.” So the typical bank will have, say, 30-40,000 different systems,” says Boden, adding how one major bank has 60 systems just for payments.

Replacing all these systems is vastly expensive and time-consuming, explains Boden, with very few banks having taken the plunge. Because the risk is significant: “People expect a banking system to work 24/7, so there’s no tolerance for it not working.” Then there’s the fact that it’s taken half a dozen years for the few banks who’ve dared the transition. “So instead of replacing the system, they keep adding. And it gets worse and worse and worse.”

It’s certainly not impossible for a major bank to solve its technology problem, says Boden: “But it’s much easier to start fresh.” Having no customers to convert is the best as well as the worst thing about that, but Boden doesn’t seem too fazed by the looming task of having to convince people to change their current accounts: “We’re focusing on people who live their lives on their mobile and are focused on getting the best technology in all walks of life.” There’ll be a phone help line, plus an arrangement for that one time a year when you need to pay in a cheque, but Starling isn’t chasing people who want to spend a lot of time in branches. Not to mention that most people don’t go into branches to deal with their current account, says Boden – they do so to deal with other banking products like loans or mortgages. Starling won’t do any of that, partially because Boden doesn’t really think the cross-selling model is viable anymore: “We believe the majority of people are quite self-directed now. In the old model, you sold a current account and then you tried to sell lots of other products. But we think people are a little more sophisticated now, making up their own minds.”

That also means Starling has no need to own its customer data: “We believe the customer’s data is their own, and shouldn’t be used to cross-sell other products.” Bank data and how it should be used is a big topic right now: “But shouldn’t it be all about helping you manage your financial affairs?” This is an interesting point of view, especially as Starling’s app will let people link their bank account to lots of other personal information across the internet. “We’re working on how people can have the convenience of that linkage, but with the security of being a bank.”

Making Starling feel genuinely different is a key motivating force for Boden, who finds there’s no real difference between the existing High Street banks: “But if there was something really inspiring that was different, it would apply to a certain segment of the population. If you can focus on what people really want – that’s the difference.” You can see how this model could potentially become popular with people in the street, but what does her old industry colleagues think of her bold new venture? “Oh, what do they think?” Boden pauses for a moment. “I’d spent the last ten years trying to convince everybody that the current model is sustainable. That we could just carry on, go through the crisis and come out the other side and nothing would change. I came to the conclusion that wasn’t possible. People are changed! People are not tolerant of banks anymore. They’re angry.” Technology and regulation have changed too, she adds, so it’s time to change the banks: “You have to be highly relevant to your customers. Otherwise, you cease to exist.”

The hottest little bank in town is an app called Mondo

FusionWire, 2015.

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The hottest little bank in town is an app called Mondo

We sat down with Tom Blomfield, co-founder and CEO of mobile-only bank Mondo, to talk about banking in the age of a life lived on your smartphone.

Mobile-only bank Mondo is a young company, even in startup terms: Tom Blomfield and his four co-founders have only been at it since February. Intrigued by a few tweets and blog posts hinting at what’s in the works, I asked Blomfield for an interview, and to my surprise he accepted. Because what can there really be to talk about this soon? Is it even possible to build a bank in five months?

The answer to this question is yes – the app is up and running, and the first Mondo debit cards have been issued. But the answer is also no, as Mondo is very much a work in progress: the app changes daily. “We’ve built a core banking system!” says Blomfield. “We have our own service and infrastructure, and the app runs on top.” This do-it-yourself approach means there’s plenty of freedom in building Mondo: this bank can go in any direction dreamt up by Blomfield and his team of merry coders.

The CEO and I are sitting on the roof of White Bear Yard, Passion Capital’s buzzy co-working space in Clerkenwell. Passion provided the “low millions” seed funding for Mondo in April, although Blomfield reckons it will take a couple of years and £15 million to get Mondo fully up and running. “We’re not even perfecting Mondo, we’re still very much building,” says Blomfield. “One thing we really believe in as a company, is being very transparent and close to our customers. We don’t want to go away and hide for two years before saying: ‘Here’s what we’ve built, does anyone like it?’ Instead we’re really open.”

It makes sense: a mobile-only current account bank for the smartphone generation begs an interactive process. “We’re trying to provide a bank account for the kind of people who live their life on their smartphones, and get angry when stuff takes more than five seconds. Like me, basically!” Blomfield laughs. But it’s right on trend: the people used to Uber rocking up within minutes, and same-day deliveries from Amazon, aren’t going to want to queue in a bank branch.

Blomfield opens the Mondo app on his iPhone. “My balance is 300-odd quid,” he says; for now, the Mondo debit cards have to be pre-loaded with cash. “You can see I bought my breakfast at Pret,” he says, as transactions are updated in real time. Blomfield taps it: there’s Pret on a map, and the tag #breakfast. “Or you can use the tag #expenses and then click ‘export’, immediately generating an expense report, with no work.”

There’s more: if you forget to touch out with your Oyster card, Mondo will invite you complete the journey on TfL’s website and avoid the fine. If your electricity bill is higher than usual, the app will invite you to investigate with a call to customer services. You can cash in your loyalty points right there in the app – the examples go on. “You start with all the basic data: what you spend, where, with which merchant. Then you move on to insights, some sort of learning. But the third step no one has got to, is action. Because we’re building a full bank, we can actually let people take action. That’s where the internet is really going.”

Blomfield’s enthusiasm for Mondo is infectious. I eye the app jealously: my bank’s app doesn’t do any of this stuff. A mobile-only bank was bound to be fun, with features like adding emoji to transaction fields, but this looks like it could actually be really useful. This bank would be less a walled garden, and more a financial hub with direct ties to the rest of your life. It turns out my reaction is pretty normal to seeing the app: “It’s often: ‘When can I have it!’” Blomfield laughs.

The banking community is starting to be won over too, now that Blomfield has a working app to show them: “Before we had the app, the reaction was very much things like: ‘Current account banking is just a commodity!’ ‘No one will switch accounts, it’s not interesting!’ And then we showed them the app and now the reaction is: ‘Oh s**t.’” Blomfield laughs again. But the reaction demonstrates the radical nature of the Mondo proposition, as a current account has always been a static place. “We’ve put a whole level of intelligence on top of it. And they say: ‘Oh my god. This is what people have been talking about for 15 years.’”

So if this idea has been knocking about for a decade, how come it’s not been done? This is a complicated issue, says Blomfield, whose team of co-founders include alumni from Allied Irish Bank and ABN Amro UK. There’s no shortage of innovation teams at the established financial groups, and they’ll come up with crazier things than Mondo: “But they are structurally unable to deliver it.” One reason is cultural: “[Established banks] don’t have a culture of regularly building and shipping features.” Then there’s the fact that many banks operate with off-the-shelf software, which, argues Blomfield, provides limited abilities for customisation. “Then there’s the old legacy banks out there who have decades of accumulated technical debt. Their systems are like Frankenstein’s Monster! … We’re different because we have a team of engineers sitting downstairs who actually write code, every day.”

Mondo is currently halfway through its banking licence application. The hope is to have a license with restrictions in about six months’ time, and a full launch sometime after that, probably in about a year. “But we have a working system, and we’re going to roll out debit cards to a few thousand people this summer. It will be based on our technology, but in the short term we’ll be partnering with another bank to provide the license.”

If all this sounds ambitious, it’s worth noting this isn’t Blomfield’s first time at the rodeo. The 29-year-old started and sold his first company, Boso, while reading law at Oxford. He then grew his second financial startup, GoCardless, to a company processing $200 million low-cost direct debit transactions annually. So what’s it like, doing this again with the added experience?

“It lets you be more ambitious,” says Blomfield, referring to how he worked with Passion Capital for several years at GoCardless. This meant his bold plans to launch a brand new bank were actually given the time of day: “Instead of saying: ‘Get the hell out!’, they said: ‘Okay, that’s interesting. Tell us more.’ … It feels like a step up in terms of ambition. It feels like this is the big one.”

He has a point: after starting a bank, how can you top that? “I can see myself spending a good proportion of my life on this, if it goes well. But it feels like this has been a long time coming: banking is so fundamentally broken. It hasn’t changed in 30, 40 years.” There are potential problems ahead for Mondo of course, but not the ones “traditional” bankers see: “The technology and licensing are serious undertakings, but they are pretty well known. Making something people really want is the biggest challenge, for any start-up,” says Blomfield. “You only really know by getting [the product] into their hands and seeing their reaction.” And Mondo won’t be for everyone: lots of people like having a branch. But this isn’t for them: “This is a bank for people who live their lives on their phones and hate waiting for anything. And if that means only addressing a third of the population, that’s fine: that a lot of people!”

That could actually end up proving a conservative target market for Mondo, judging from figures from the British Bankers’ Association: mobile banking has eclipsed not just branch-based banking, but also web banking, this year. Having said that, there’s no doubt that Blomfield is fully aware of the blue-sky potential for Mondo: “I think banks have an extinction event on their horizon. I want to be building the kind of company that replaces them!” He laughs again, but you can tell he’s serious. “I love technology. I love the way it can just make everyday life much, much better. … Sometimes it feels like we’re living in science fiction. It’s incredibly exciting.”