By Oliver Smith on Monday 22 March 2021
Mintoo Bhandari’s bank is on a mission to help millionaires.
Even in the post-financial crisis world, where banking licences have become somewhat easier to obtain, it’s still a rare pleasure to meet a bank’s founder before it’s even launched.
Enter Mintoo Bhandari, the founder and managing director of Monument, a newly-licenced and freshly-funded digital bank aimed at lending millions to the “mass affluent” at the touch of a button, all through their mobiles.
And who said fintech is becoming boring?
First of all, Bhandari is keen to distinguish precisely who Monument Bank is talking about when it refers to the “mass affluent”.
“It's the largest unserved market opportunity in the world today in financial services,” the calmly-spoken founder explains, pointing to people with a net worth of between £250k and £5m (excluding their main property).
These aren’t ultra-high net worth individuals, multi-millionaires who might outsource their finances to money managers. Instead the mass affluent sit just above the DIY retail market and might need extra service and support to deal with their increasingly complex financial lives.
It’s also an audience that Bhandari—with his 25+ years of experience in private equity across Mumbai, New York and London—knows well.
“Historically, when you think about this group, you might think about premier banking,” says Bhandari.
“But that typically involves people, and putting people into the mix made it very unsustainable from an economic standpoint. So a lot of large institutions either retreated from the space or never really got adequate traction.”
The exception, in Bhandari’s mind, is a particular well-known American credit card company that he praises for doing an excellent job in the space, “but I think their model is still stuck in the 1980s and 1990s.”
Monument’s plan is to do mass affluent banking better, and to reach profitability within 24 months of launch.
Initially Monument will focus on lending, with Bhandari outlining ambitious goals, including 8-minute approvals on buy-to-let mortgages of up to £2m.
“Which is, you know, a very large sum, but this [mass affluent] community is the most creditworthy segment of the market.”
Bhandari says Monument’s data-driven process of analysing and affirming credit quality will mean the bank has “single basis point credit risk, which is almost unheard of.”
Buy-to-let and bridge-to-let are core products that Monument will launch with, designed to appeal to the bank’s wealthy target audience.
“Many of them have three, four, five, or six properties, and they almost become professional landlords on the side,” says Bhandari.
Monument will also have relationship managers available through voice, video, email, chat and what Bhandari calls co-browsing, where an “RM” can join you on your smartphone while you’re browsing and help advise on a decision.
And the bank’s lending will be funded by a range of savings products, from easy access to fixed savers, with Monument taking a “quite attractive” spread in the middle—“classical 1,000-year-old banking” is how Bhandari describes it.
“So I believe I can get to breakeven, you know ideally I'd like to do it in the first year, on the outside, it'll be in year two,” he says.
Less classical is how Monument will operate, by harnessing the growing power of open banking.
One of the most novel things about Monument’s strategy is that the bank doesn’t intend to offer its customers a bank card, or indeed a current account at all.
Instead, the plan is to connect to a customer’s existing current account, whether with a high street bank or digital challenger, all via the wonders of open banking.
“All we're doing is saying, come to us for service, come to us for better deposit rates, come to us for complex lending.”
But stay where you are for your current account.
Bhandari believes open banking is “nowhere near where it will be in the future”, but that the technology is in place for Monument to offer a seamless lending and deposit experience, without needing to offer a current account.
Fundamentally that slashes Monument’s cost base, and positions the bank more as a high-touch property lender than a jack-of-all-trades current account provider.
Much of what Bhandari describes is unproven, and he’s frank that the bank’s plans will certainly change and evolve as it comes to market.
But, for now, the ambitious founder is outlining a retail digital banking model quite unlike what’s come before.