Simplicity, transparency and speed are the building blocks of a new way of banking, says the CEO of Atom Bank, an app-based service set to launch this year.
How can you launch a new bank on a new platform and encourage customers – who are typically reluctant to switch providers – to trust you with their money? It’s not a question Mark Mullen, chief executive of Atom Bank, is fazed by.
The Durham-based bank, which received its licence to operate from the Bank of England in June 2015, exists solely as a mobile app. There are no branches, and its corporate website is there simply to explain that Atom is “building this bank for you” and “celebrating your individuality” rather than offering direct access to its services.
Only final testing, board sign-off and regulatory approval of a recent £45m investment from Spanish banking group BBVA stand in the way of the official launch expected early this year.
“Very few customers of any age group move banks,” says Mullen. “We’re for people who are willing to try something new, willing to take a punt and willing to explore.”
Internally, Atom Bank describe their target customers as the early adopters who have been open-minded enough to support the likes of Google and Apple, and more recently Uber and Airbnb. But isn’t “taking a punt” with life savings a much bigger ask?
“It could be. But we’re a fully paid-up participant in the Financial Services Compensation Scheme and that means if you bank with us you will have the same protection as you would have with any other bank in the UK,” he explains.
“We’re also authorised by the Bank of England. With no disrespect to some of the other ideas in the banking market, we’re not a new, innovative or zany way of raising capital or borrowing. We’re a fully paid-up, fully authorised, fully regulated, full-service bank.”
Indeed, Mullen has previous experience of providing new ways to access traditional banking – he was CEO of First Direct, an online and telephone-based banking division of HSBC, from 2011 to 2014.
Designed to fit
While has taken some time to get Atom Bank to the sign-off stage – Mullen talks about “blood, sweat and tears – and months and months of work”, he credits the regulators with sticking to the timetables promised.
“Banking is not a simple business,” he says. “It’s about the health and wellbeing of people’s finances, so it shouldn’t be easy.”
He doesn’t think the current regulatory environment – and upcoming or likely changes – are prohibitive for start-ups in the sector either. “The expense of regulation for existing banks is absolutely immense. By contrast, it’s marginal for us because we can design our bank to fit the regulation,” he explains.
Banking is about the health and wellbeing of people's finances, it shouldn't be easy
The same benefit applies when coping with the threat to cyber security. Atom is positioning itself as a pioneer in biometric banking, with face and voice recognition two ways in which customers will be able to log in and make financial transactions, reducing reliance on passwords, which are often too weak to be secure.
“I know that our technology is a damn sight newer than most of the big banks’ technology. We’ve recently designed and built everything we’re doing and therefore we know it intimately. Big banks are dealing with layers and years of complexity that can be difficult to navigate.”
Keep it simple
But the acid test for Atom’s early customers will be whether the banking experience is better. And again Mullen emphasises the importance of rethinking what consumers want and need, rather than developing a “shrink to fit” version of traditional banking services.
“Everything about this bank has been designed to work in a mobile distribution environment – if it doesn’t work optimally for four-and-a-half or seven-inch screens, we don’t do it.”
This means Atom will have fewer products. Above all, Mullen wants to focus on simplicity, transparency and speed.
“You’ve got to make sure that customers are insulated from the complexities of your business,” he continues. “They want a well-designed customer experience that’s intuitive, easy to use, reliable and secure – and one that provides good value.”
For example, for small businesses he believes getting a fast decision on a loan is just as important as what that decision is.
It's entirely possible to deliver world-class outcomes from anywhere in the UK if you've got an engaged workforce
The cost of running the business also matters to customers. And Mullen – who ran First Direct from Leeds – explains that cost was the most compelling reason for basing the bank in Durham, rather than London, especially as the local council has taken shares in the business in lieu of rent.
“There’s an appetite for business investment in the north of England,” he says. “People want to stay here; they don’t want to have to go to London. It’s a very attractive thing for local government to diversify the employer base and we’ve been tremendously well supported.
“It’s entirely possible to deliver world-class outcomes from anywhere in the UK if you’ve got an engaged workforce.”
Mullen’s ambition for the bank is for it to be a £5bn business in five years, while keeping staff numbers below the 500 mark. It currently employs 170 people.
Even before launch, it’s made it to number eight on KPMG’s global “Fintech 100” list, released in December. The UK has 18 firms on the list.
For Mullen, the UK is a good place for Fintech to flourish because it has a generation of people able to combine experience of banking with experience in technology to “know the art of the possible”. But he believes many ideas are too niche to be sustainable, or ultimately rely on banks buying them for their future.
He wants Atom to be different.
“We came here to transform an industry, not to challenge it,” he says. “I think challengers are challenged because their models are not right, or because their growth aspirations are too modest.
“Now we have to earn our stripes, we have to earn the right to be successful, and that’s going to take some time. But we’re determined.”
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