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they’ve only been around for a few years or less.”
However, OakNorth, which received £66 million investment from an Indian mortgage lender, has been able to take advantage of newer technologies not available to the High Street stalwarts in their formative years. “In May, we became the first and so far only bank in the UK to move its core systems to the cloud, enabling us to scale up more quickly with fewer resources and launch new services and products more efficiently,” says Khosla. This has the benefit of ensuring the technology doesn’t get stale, he adds. “Being in the cloud also helps us prevent our systems becoming ‘legacy’.”
In a market increasingly occupied by niche players, OakNorth also has a clearly defined customer in mind, offering structured loans to mid-sized growth companies and entrepreneurs. “We deliver this proposition better than the big banks and hence are managing to take market share from them. Other challengers are doing the same on other specific areas; for example, mortgages, current accounts.”
Khosla accepts that not every challenger bank will survive and says “some challengers will be bought out by established players. Others will become large enough to start acquiring other challengers.” He hopes OakNorth
will fall into the latter category. However, there is a third option: partnering with other best-in-breed FinTechs to provide customers with a full portfolio of products and services to choose from. This is an approach championed by Mondo’s Blomfield.
“Rather than trying to be good at everything, smaller players are doing one thing really, really well. The next stage will be, ‘how do you combine those things into an intuitive user experience?’” Earlier this year, Mondo raised £1 million through Crowdcube, inviting potential customers to co-invest alongside its private equity backer Passion Capital. “What we’re trying to do is build a bank as a marketplace, a bank as a platform, rather than a one size fits all bank.” This will enable it to slip neatly into a broader aggregation of services, he says. Mondo’s aim, it seems, is to become the marketplace of banking.
“We realise that at some point you might need a mortgage or a loan for a car, or to send money abroad. They’re not necessarily services we’re going to provide but we will make those services available within the Mondo app, all powered in the background by the API. The interface will work in a seamless way so the customer will benefit from the best products across the market from within a single app.”
www.ibsintelligence.com © IBS Intelligence 2016
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