UK digital bank Monument takes advantage of new opportunities emerging in digital banking by focusing on providing complex services backed by new technologies. Finextra spoke to CEO Ian Rand to explore the new services the bank is developing, the future of financial services, and catering to the mass affluent.
The mass affluent population is about five million people across the UK. Rand describes them as a “very diverse group”, ranging from “young families who for have spare cash for the first time and are looking to grow their wealth to retirees or people who have sold their first business.”
Developing new services at Monument
Currently, Monument is live with lending for buy-to-let loans and deposits. Monument’s focus is on growing the lending business, specifically on complex buy to let professional landlords lending, as the funnel is increasing dramatically in that area. The neobank is piloting new services that are coming later in the year.
Rand observes that Monument can succeed where big players have made mistakes in the past when it comes to lending. Traditional banks need to define all the different types of loans in order to automate lending, whereas Monument possesses the technology to be more adaptable.
“I think what's brilliant when you come somewhere like Monument is that you have lending technology, but you also have the ability to put people on it and do great lending that big banks won't do because it doesn't fit into their cookie cutter loan model.”
Rand believes that many larger banks are lacking in terms of service models and customer relations. He emphasises that Monument can thrive with the combination of digital tech and customer service as their operating model.
Thus far, Monument has raised £60 million in funding and is planning on closing the current round during Q3. The digital bank has forged partnerships with Salesforce and Mambu as providers for core banking, operational processes, and workflow.
A key aim for Monument is ensuring that their client service and operations are first rate. Explaining his transition from a Barclays exec to CEO of the neobank, Rand asks: “Why was Monument keen to bring somebody like me into this role? Because as we keep growing, it’s really important that we deliver great client service – that our operations and technology is great coming from a bank where you spend a lot of your time focused on the details. Coming to Monument for me was the chance to move somewhere much more agile and nimble, that had a huge opportunity in front of it.”
Looking to the future of financial services
Monument has differentiated itself from other neobanks through its pursuit of the mass affluent, while considering the prevalent trends in their portfolios. This specific pursuit demonstrates why Monument nurtures an open attitude towards future trends across financial services.
Cryptocurrency, for instance, is something that the majority of the mass affluent have increasingly become involved in, and Rand believes banks need to embrace that aspect of the modern banking era.
In Monument’s approach to CBDC and crypto, Rand states that big banks cannot ignore the fact that about 40% of the mass affluent have crypto in some part of their investing history. Yet, he underscores the importance in approaching it with care and mindfulness of regulation, still leaving a material amount of functionality that they can provide.
When asked about Buy Now Pay Later (BNPL), Rand elaborates on the emerging forms of lending: “There's some really interesting new models, but they have got to offer something new. What BNPL did - it wasn't just the product. It was the ease with which the product was integrated into the buying journey. If you're going to bring something else to the market, whether it's payment or lending, it's got to be easy and accessible to work well, and that's what BNPL tapped into.”
Rand emphasises that Monument is driving their concentration on open finance rather than open banking. “Open banking is only a stepping stone to the real transformation, which comes with open finance. We do not want to replicate the same mistakes that happened with open banking, where the big banks were doing the minimum.” With open finance, Rand sees a brighter future of app development and synergistic relationships facilitated by APIs for Monument.
Rand also defines the need for banks to go beyond automation and digitisation, arguing that the biggest opportunity for new banking entrants is “to be at the edge of where automation meets relationship, where automation meets bespoke, and be constantly pushing that boundary forward and delivering the more complex services.”
Monument’s future development will be focused on providing complex, personalised services for the mass affluent, and placing emerging technologies in the forefront to support its ventures.
Catering to the mass affluent
Rand believes that Monument’s dedicated commitment to the mass affluent is what sets it apart: “Our focus on the mass affluent is different because there is no other mass affluent digitally focused bank in the world. There's some that are close, but not exactly. In the UK, there's nobody else providing this service.”
Monument aims to improve the lives of the mass affluent by aiding them in making quick decisions easily. Their strategy focuses on creating more cost-effective and less time-consuming solutions for mass affluent investors, business owners, and catering to their personal requirements.
The needs of the mass affluent are more complicated than, for example, simply looking for a mortgage; they are looking to invest in a property, to buy or to let, and more. Monument aims to support them in all forms of decision-making when it comes to financial well-being. Financial decisions aren’t straightforward, and Rand underscores how Monument’s services provide the mass affluent with the tools they require to navigate more complex financial situations.
Additionally, Monument is ambitious in their profitability in the coming future. Rand expresses excitement around the opportunities to develop more dynamic and complex services at Monument. “We keep our costs high and deliver high quality, high-margin complex lending that will get profitable much quicker, which will enable us then to get to attract more capital and do more exciting things.”
He describes three major elements to the Monument strategy: the steadily growing bank which is “vaguely traditional” with lending and deposits, the distinguishing services they provide, and the fact that the two first elements are powered by new technologies.
Rand is confident in Monument’s capability to attract new investors and increased participation from existing investors through these three elements.
“If you're a fintech and you're interested in the technology, we've got that. On the other hand, if you're looking for more of a balance sheet play, we've got that as well. If you look at some of the technology that underpins the first wave of neobanks, it's already looking a bit aged. At Monument, we're the best in class in that we can swap out as and when we need to if something better comes along. With the module we have, it's easy for us to plug a new one in for a new software provider.”