When we talk about the mass affluent, it goes beyond high-net-worth individuals and affluent retirees to people who have made a huge fortune from the sale of a business, a young couple who has suddenly inherited a lump sum of money or a recent graduate who has just landed a high-paying job.
In the U.K., this large community is underserved and often overlooked by major high street and digital banks, said Ian Rand, CEO of U.K.-based digital bank Monument, leaving them with no choice but to rely on traditional lending and savings products that are not tailored to their complex needs.
“This community have lost a lot of the sources of advice that they used to get,” Rand told PYMNTS in an interview, adding that “they used to be able to go and talk to brokers and advisors, [but] they do very little of that now because the bar to be able to deliver that service has been set much higher.”
Monument is now looking to fill that gap, enabling the country’s mass affluent to open an account with a minimum of £25,000 and get access to competitive savings rates or a loan of up to £3 million in a few clicks.
According to Rand, while the process by which high street banks provide loans and mortgages is increasingly digitized and faster, it has come at the expense of lending flexibility.
“It’s really hard to digitize the process of lending money to eight flats that are in a building that’s also got a shop on the ground floor, [with] the landlord looking to get a loan against the whole thing,” he said, pointing to the reason why many high street banks are simply passing over more complex loan and mortgage opportunities.
Here too, Monument comes in with its unique value proposition of tailored lending services such as complex buy-to-let and bridge lending — services that are not delivered by the high street banks’ current one-size-fits-all approach.
“That’s an area where you crossover between business lending, mortgage lending [and] personal lending. It’s nonregulated, but it’s complex and we’re [combining] both digital and human support to get complex lending over the line,” Rand remarked.
From Open Banking to Open Finance
When it comes to open banking payments, Rand argued that while it has been helpful in forcing the big banks to assess their technology and make their data more available, “it hasn’t really had the transformational effect.”
To move the needle, it will require a shift from open banking to open finance — enabling the sharing of consumer data beyond banking to more financial products and services like mortgages, savings, pensions or insurance.
By doing so, financial institutions like Monument will be equipped to help customers tackle real-world problems.
“[If] I can get information about your mortgage [and] also get details of your cash and savings account from somewhere else, [then] details of your investments from your broker, we can now start delivering real, valuable services that [aren’t possible] today when you’re just staring at the current account,” Rand said. “That is what’s going to be truly transformational.”
Related: FICO Teams With Open-Finance.ai for Real-Time Credit Assessments
Another area that could be included under the open finance umbrella is crypto asset investment, Rand said, citing crypto wallet businesses as among the actors that should be opened up as part of open finance.
The ability to connect crypto wallets to financial management tools would be especially beneficial for Monument’s clientele, he added, pointing to the 40% of the mass affluent who “have got some element of crypto in their asset list.”
Read more: 42% of Consumers Would Switch Banks to Get Bundled Banking Products
Going forward, the neobank intends to focus on catering to the mass affluent market while growing to profitability — a feat that other U.K. neobanks like Starling have achieved.
As Rand said, “We’re not really focused so much on sheer numbers — you’ll never hear [us] talking about how many million downloads we had. […] Doing a smaller number of high-quality large loans will get us to our target and get us to profitability quicker than simply seeking scale.”
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