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all gain a banking licence and/or go live.


At present it’s also a fact that due to European regulation only a maximum of Euro 5 million can be raised via crowdfunding before companies have to publish a prospectus, although lobbying is underway to raise this to Euro 10 million or more. After that, private money or a traditional IPO route must be followed.


There can be no doubt that digital-only neo banks want to disrupt the sector. “We will offer a current account, MasterCard debit card, overdraft and a nifty mobile app when fully launched,” says Mondo’s CEO Tom Blomfield, outlining his plans, and hopes for an imminent licence.


Mondo, which provisionally changed its name to M in mid-June in keeping with its logo after a legal challenge, “will launch by the end of the year or Q17 after we’ve raised a further £20 million”. It currently has 1,500 cards in circulation as part of a beta trial and is constantly updating its app and product roadmap – usually via the Trello collaboration board online tool.


“Most traditional banks only use smartphones at the moment as a lower cost channel to market and way to poach customers from other banks. They’re not fully utilising the convenience or other capabilities,” continues Blomfield. “Only time will tell if FinTech firms can disintermediate banks. However, I believe 95% of the retail bank market will eventually move to smartphones. I just want to get down to building my business, prove it works, and get some of that market share.”


The emergence of new entrants has been a theme for the retail banking sector ever since the financial crash of 2008 left them with a lack of budget to initially


compete with innovative digital-only ventures or even first wave challengers such as Metro Bank, which still have branches but no legacy concerns. All such newcomers are looking to take market share from the likes of Lloyds and Barclays in the UK. The picture is replicated around the world’s developed markets.


Older banks have older systems. These need a digital transformation in order to compete with newcomers on delivering seamless 24x7 interconnected services on mobile apps, online and in the data-driven e-commerce world.


The drive for open application processing interface (API) banking, which aims to make banking a platform that can be easily accessed by innovative tech firms that develop useful tools, is also threatening to disrupt the market. However, established banks can and do argue that the advent of service orientated architectures (SOAs) and API banking offers them opportunities too, alongside these new arrivals. Incumbents can more easily harness innovative tools and disruptive technology in an open API environment, and align them with their established, secure customer bases, especially if they retain the crucial customer trust upon which their business rests.


The UK is a pioneer in this field after publishing a framework for an API-led Open Banking Standard in February 2016. The UK government initially tasked the industry-led Open Banking Working Group (OBWG) to work on developing an open API standard and to allow customers to better access their own bank data (midata), or else face legislative action “if necessary”.


The direction of travel was clear in 2015 when the UK Treasury’s ‘Banking for the 21st Century’ report was released, with the OBWG framework following this year. It is designed to support the use of open


www.ibsintelligence.com © IBS Intelligence 2016


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