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“When you see bad practice, you tend to ascribe it either to management incompetence in established companies or youthful excess in startups. Most of the time, you’d be right.”

David G W Birch, Forbes

Good morning!

The FinTech market is still going strong, though maybe a little slower at the moment. Despite continued discussion by some of the US presidential race, we will likely see a change in international relations over the coming year. This could bode well for international FinTech cooperation, but then again some companies might decide to concentrate on their local market. Globalisation is an estimated 35 years old this week, and set against a background of climate catastrophe, many are wondering if it was all worth it. The tagline “think global, act local” might still have value in it.

In the news last week:

Monument is a new bank for the mass affluent launching in 2021. This customer segment, defined as those customers with assets of between £250,000 and £5mn excluding their main residence, appears to be under-served by the neobanks. It is thought there are 3.5mn such people in the UK alone. Each bank will segment its clients in different ways, and some like Monument will focus on just one.

C-Innovation Customer Segmentation

Whilst this is not really ground-breaking in terms of news, it is actually a very interesting case in terms of strategy. The team at Monument will be involving service providers to build their technology, instead of doing what most FinTechs do, which is build it themselves more or less from scratch. Last week we mentioned that Visa card is partnering to offer related services to its customers; in Monument’s case it is slightly different.

Accenture Interactive and Persistent Systems are to be involved with the architecture, Amazon Web Services provide the housing, and Mambu and Salesforce the banking and customer service side of the technology. These are big names and it begs the question of why this approach is not more common. Typically banking services have been built in a proprietary way, with minimal if any connection to third-party providers. This provides the comfort and control of ownership, yet makes such a bank susceptible to rigidity in the long term: indeed we at C-Innovation have seen this first-hand on many occasions. With technological progress having increased dramatically over the last years, flexibility and time-to-market are two very effective ways to stay ahead of the competition. A plug-and-play approach such as Monument’s will allow it to connect and disconnect partners to its banking system as its needs evolve.

This approach will dictate the levels of expertise at the bank. With less in-house IT specialists needed, the bank will be able to concentrate on the business of banking, which is a win-win situation for the bank and customers alike. Though not always easy to manage, it does provide a human resource risk profile that in some sense is counter-cyclical to that of the mainstream. Whereas the big banks are busy cutting staff, Monument will be starting out with the model those big banks are seemingly aiming to attain.

C-Innovation Bank Layoffs

If Monument can successfully integrate the various specialists to get it up and running, we think it will have a very solid yet modular base for the future. In our experience, modularity pays off well. This is definitely one firm to watch closely.

PEOPLE: They really are the most important part of any business.

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