EXCLUSIVE: “Building Up and Out” – Ian Rand, Monument in ‘The Fintech Magazine’

UK neobank Monument took a highly targeted approach at its launch in 2021, but that’s laid the foundations for a much bigger structure, as new CEO Ian Rand explains

The cost-of-living crisis continues to grip the UK as inflation, which entered double digits for the first time in 40 years in July, eats away at people’s hard-earned cash.The Bank of England’s successive interest rate rises should be welcome news to savers if lenders pass them on – and in good time. But they’re causing chaos in the property market with the cost of borrowing soaring and lenders playing hokey-cokey with deals – 40 per cent of products were withdrawn in a matter of days and replaced with less generous offers as lenders struggled to keep up with financial markets in October.

It’s been something of a baptism of fire for savings and investment neobank Monument, which laid out its stall in 2021 for the 4.8 million-strong ‘mass affluent’ class of investor building a diversified portfolio, with an initial emphasis on buy-to-let. By this summer, it was offering some of the best high-street-beating savings rates for individuals with a minimum of £25,000 to deposit on a fixed term.

Not surprisingly, it attracted strong interest, fulfilling the products’ purpose of being ‘a really good baseline service that helps bring customers to Monument’, according to CEO Ian Rand, and allowing the bank to make an average advance of £1.5million in its first year.

It was the failure – or, more accurately, the inability – of mainstream banks to adequately serve the complex, often bespoke needs of these busy professionals, who probably aren’t earning quite enough to be targeted by wealth managers, that created an opportunity for Monument, says Rand. Recruited from Barclays, where he’d been head of business banking until January this year, he says: “For the mass affluent, the most precious commodity isn’t working capital, it’s time. They don’t have the time to manage their finances – a person might, for example, have several pensions all invested in UK equities, but have never stopped to think about diversifying those savings.”

“Underpinning everything we do is some fundamentally innovative technology”

The bank, which serves customers primarily via its app but with relationship managers at their disposal, has so far offered fixed-term deposits, buy-to-let loans and bridging loans. Its proprietary technology is designed to give the bank the flexibility it needs to respond rapidly to changing conditions, such as the current turmoil.

“Our team is a mix of people with great banking experience, and real innovators with no banking experience who constantly ask ‘why do we have to do it like that?’,” says Rand. “Those are exactly the voices you want in your ear in this very uncertain world, where everybody in business has to have their eyes open to the rapidly changing challenges.”

Monument’s custom Cloud-based architecture allows it to take a plug-and-play approach to its operations, giving it an advantage over legacy systems used by older banks, says Rand.

“Our architecture provides us with rapid agility to launch and withdraw savings products almost instantly, without disrupting the client experience. Since December 2021, we have utilised it to change our savings products quickly and efficiently to swiftly react to the changing savings market.

“We seek to bring the best of technology to speed up processes but have talented people on the end of a phone who can look at credit cases. High street banks have focussed on automation and simplification, and if you don’t fit the box you can find yourself underserved,” adds Rand.

Monument’s app-based account opening process is one of the fastest on the market, powered by bespoke, highly adaptive infrastructure composed from a number of providers.

BUCKING THE TREND

Its strategy of serving a niche is a departure from the mass-market neobank model that has struggled to achieve profitability. A report by management consulting giant Simon-Kucher & Partners this year counted 400 neobanks across the world with close to one billion clients but estimated less than five per cent had reached breakeven.

For many, revenue per client remains low and too many focus on accounts and card-based payment services, which are typically a loss leader, it said. The report noted the arrival of niche players serving distinct segments, such as US neos Cheese, targeting the Asian-American community, and Daylight for LGBTQI+ customers.

“Are some of the first-generation neobanks already legacy? At some point, some of the household names will start saying they need to replatform”

Simon-Kucher concluded that neobanks needed to offer digital mortgages as well as buy now, pay later and digital/hybrid investments, to access profitable customer segments – much of which is already in Monument’s scope.

“We don’t count our success based on how many million customers we have, we’re in a different game,” agrees Rand. “If you had asked any of the household name neobanks what their average deposit was six months after launch, you would have got an answer in the tens, or if you were lucky, hundreds of pounds. The average deposit in Monument is over £50,000. So, we’re getting scale not through numbers of clients, but through the quality of the business we are doing.”

Beyond deposits, Rand says his business is exploring other financial products to meet the specific lifestyle needs of the mass affluent, and may well spin off its technology, as the bank’s chief operating officer Steve Britain already hinted earlier this year when he said the platform ‘also has the potential to power other banks in the future’. Monument is looking to help its clients ‘prosper financially, in health and wellbeing’ with various pilots being trialled, adds Rand, but won’t divulge more beyond saying that he hopes to see a launch soon.

“We’re working on a broader suite of products and services that can help make mass affluent lives easier, both here in the UK and globally,” he says. “Underpinning everything we do is some fundamentally innovative technology. Some we’ve built ourselves and we’ve also leveraged the best-in-class from Mambu and Salesforce, among others. We’ve seen interest globally from leveraging that technology, and we’re working out how we can transfer that elsewhere to help other banks and fintechs.”

Despite its youth, Monument clearly sees itself as a leader in the fintech space.

“Are some of the first-generation neobanks already legacy? At some point, some of the household names will start saying they need to replatform,” says Rand.

“But what we’ve tried to do at Monument is use a Lego brick analogy, where if we want to change an element of our tech stack, because someone comes along who is better than the current provider, we can take one out and plug the other in.

That’s a healthy way of thinking about your technology but you’ve only been able to do that for the last couple of years.

“Similar to our technology ethos, culturally we build for the future,” he adds. “We already have the policies, procedures and standards. Because it’s not just about digital, it’s about taking your customers on your journey as you scale..”

This article was published in The Fintech Magazine Issue 25, Page 76-77