Norris Koppel, founder of Monese: where we are going, we don’t need banks.

Hallo mr. Norris Koppel, founder at Monese. How are you?

Hi Claudio. I am very good. And thank you very much for reaching out and wanting to talk about it It’s a big honour for us.

When I first knew about Monese I was on Instagram. I red a post published in MyMonese profile, saying: “WHERE WE ARE GOING, WE DON’T NEED BANKS”. And there was another one saying “HERE’S TO THE CRAZY ONES. THE MISFITS. THE REBELS”. What do you mean exactly by these messages?

What we mean here is that those services traditionally offered by banks… there are now other companies that are non-banks that offer the same services. So customers don’t have to use banks any more for, for example, payments, or using cards and shops or to borrow money. Customers now have a choice. They don’t need banks because there are more alternatives available. Monese’s approach to banking is different. We approach it from different angle then banks. For example we offer opening banking accounts with much more agility and speed, because we know people move around a lot and they don’t live in one place in their entire lives, so we built international banking into our product as a standard and this is not something that high streets banks do. We also don’t lock in our customers any more, because we understand that if customers don’t like us they will just leave. So we work very hard on making sure that our services are really that good that people not just use it but they love it and invite their friends to use it also.

So you are not a bank.

We are not a bank, but we are still a financial institution. We are regulated in the UK as an electronic money institution. This enables us to take customers’ money, store it safely and also provide payment and debit card functionality. But we are not a bank.

When you say “electronic money institution”… this reminds me of something about bitcoins… there’s nothing in common, right?

No, it is just a different term. So basically what sets us apart from banks is… for example, if we take customer’s money we can’t play with it. We can’t reinvest it, or lose it or anything like that. We have to keep customers’ money in safe banks, in a safeguarded and segregated accounts, which basically means that once customers puts money into a Monese account we put it away and we can’t touch it until customer asks for it.

We are living in times of crisis due to the banking system. European democracies paid a lot to save banks, and many people see banks no more as something useful but more often as an enemy. What is your assessment, nowadays, about the reason of the crisis, about bankers and about the whole financial system?

Well, in the past banks had gained too much control over customers’ money. Obviously everyone was taught to trust banks the same way we were taught to trust governments. And then suddenly this trust was broken by global financial crisis. This left everyone looking for a safer and more reliable alternatives to traditional banks. And the legacy banking system has taken a lot of risks with customers’ money, also this without any transparency whatsoever. This has led to this global banking crisis and, because of that, this is where we are right now. Although I can say that there is something positive about this situation also. Because of this situation, this has enabled non-banks, such as Monese and many others, to innovate and re-think entire banking. So, for example, banking services right now are being slowly broken down into different pieces and services. And they are divided by many new innovating companies that do it much better and at the end customers win.

So are you saying that you are not willing to use customers’ funds to invest in markets or in any other way, such as derivative and so on?

Yes: correctly! We will not use customers’ funds in any way. Customers’ funds are held in safeguarded and segregated accounts and they are completely different: they are kept away from our own funds, for example. They are ring-fenced. So customers’ money is safe, in that way: we can’t touch it, basically.

So you refer to this as to the future of banking, right?

Well, what I am saying is that we provide alternative banking solutions. We are more agile, we can move faster and we can provide certain services in a much better way than banks too. I think also that banks will not disappear anyway, that will still stay there, but may be face to face contact with the bank and customer becomes less important because of companies like Monese, and there is lot of others sort of financial technology companies that take over that relationship with the customer, but they still have to use banks as underlined platform, in a way. So there is no escape. But customers will talk to us, not to the banks.

You said that where you was young (I red about it) it was difficult for you to open a bank account in the UK and that you are willing to solve this issue for everyone. Why many people do not have access to financial services?

When I moved to London, years ago, I was really amazed how difficult it is to open an account with high street banks, if you are new to the country. I come from Estonia myself, and in this country it’s really easy to open bank accounts. You just walk into a bank and like in two minutes you have an account. This is super easy! It wasn’t the case in the UK. I went into a bank branch here in London and I said “I want a bank account”, he said “Ok, gimme your passport and utility bill to prove your address”. So I had my passport but no utility bill, because I had just moved into the country. As you know it takes time to get like electricity bill or gas bill and so on. So I had to basically wait for a month before I got my first bill and then I went back to the bank and finally they gave me an account. But this a silly situation! And also another difficulty why it’s so difficult to open an account is: banks are basing services around credit. So for example, again, in the UK, when you go to a bank to open an account, they credit score you. They want to make sure that you are creditworthy. Because if you only need a bank account, you don’t need credit, or overdraft, or loans, than it doesn’t make any sense. And if you get turned down because you are new to the country and you don’t have a credit history in that country and you get turned down this is really annoying and it shouldn’t really happen. Why it is happening? Banks systems are designed in a very specific way over tens and tens of years. So they have banks incredibly complicated and complex and old school system and they can’t easily change it any more. In order to change it they would need to completely rip it apart and to place in this new technology. These systems do not take into account that people move around, in modern world, and they are not taking advantage of the modern technology that, for example, would enable to verify someone’s identity on-line, in a safe and reliable way. So we wanted to void all these historical restrictions, and thus we have built basically technology from zero. We can now open banking accounts to customers completely on-line, in real time. It doesn’t matter if you are not citizen in the UK, for example. Obviously we are still following all the laws and regulations and we comply with anti money laundering, laundering laws and so on… We understand that we have to do this because world has changed and there’s no other way. It has to be that way!

In this age of finance and stock-market dominated world, may I say Monese is aiming to put the citizen again at the heart of the true meaning of it all? Well, this is quit a philosophical question, I can understand…

Yes, absolutely! So… When we started Monese, we thought that access to the financial system, this is a basic human right, right? You don’t have to store your money under the mattress. You have to be able to put it somewhere safe, where it’s not lost or where someone can’t steal it away and so on. So we thought it’s a basic human right and currently I must say 45% of the entire planet population does not have access to the financial system, which is really sad. This is a reason why we are aiming to build a service around what people want, a service that is easy to understand, and the pricing model that is easy to understand and transparent. So people, if they choose to pay for those services, they at least know what they pay and how much and for what.

I am really impressed by the social media strategy you engaged in, which is quit uncommon for a non-bank. You are very smart, very social friendly and use a fresh young language. And you are promising that it will be possible to open a bank account in minutes from a smartphone. How did you take the decision to make such a massive use of technology and what feedback, especially, do you have in return from this social media campaign?

Technology and customers’ engagement has a very important role at Monese. We made it our core mission to build a product that people would love and they use it not because they have to, but because they want to. Everything really is built around that. The team… we have hired people who believe in the same thing. Our app, our tone of voice when we talk to our followers, and so on… Because we want to be really transparent, in everything we do, we are talking to our potential customers with a very direct way and at personal level in social media. This is what banks typically don’t do, so we have taken a different approach, yes. And so far it’s successful because we have tens of thousands of followers already in social media.

What is your relationship with bankers? I mean… Are they feeling you as a competitor?

The relationship with bankers is somewhat complicated. I don’t think they are taking us as serious threat yet, because we are so so small obviously, but at the same time I think that people feel that they need to open up little bit more and work with companies like us. It’s little bit like a love and hate relationship, I would describe it. Both sides understand they need to work with each other, but may be don’t want to.

Who can open a Monese bank account?

Monese accounts can currently be opened by anyone who lives in European Union. It doesn’t matter where you are coming from or what passport you have. So this works very well for people who are expats or immigrants, who might find otherwise very difficult to open a bank account in a new country. And, as I said before, our underline technology enables us to verify customers’ id in real time and all you really need is your passport and your mobile phone. And this makes a huge difference to immigrants and expats, because effectively what we are doing is: we are lifting the barriers to enter the financial system, because residency restrictions are taken away.

Do you have to be a citizen of EU? Or..

What we need to do is… we have to be able to verify your address in European Union, right now. This is where we start. We obviously want to expand our service, so we can also provide services to other people as well, but right now this is what it is. But it is already pretty good.

When will be this service be available?

The service will be available in few weeks time. Right now we are all ready to go. And we are doing least final testing and so on, but it’s gonna be available very very soon.

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