When Norris Koppel came to the UK 18 years ago, he landed a good job and found a flat to rent.
But there was a problem: the banks refused to let him open a current account. Koppel had no credit history in the UK, which meant – as far as the banks were concerned – he didn’t exist.
Given that international payments would incur costly foreign exchange fees, his employer didn’t want to send his salary to his Estonian bank account either.
In the end, Koppel found himself in a weird situation where his salary was being sent to his flatmate (with consent from all parties, of course), who would then pay him his monthly earnings. “It was humiliating,” he tells me. “Everything in my life was going well, but I was being treated like a second-class citizen. It doesn’t matter who you are, if you are not getting something which you assume is a basic right, it feels bad.”
It took several months before Koppel had the necessary paperwork and some sort of credit score in the UK, but his own experience had exposed a flaw, a problem – something which could be improved, if not fixed.
And this wasn’t just Koppel’s problem – nor one that is limited to the UK. In Europe alone, 140m people have very limited access to banking services – that’s every third European. And on a global scale, it’s over two billion people.
According to Barclays research, people who don’t have a formal bank account, pay on average ￡1,000 more annually for financially services than those who do.
And so, as is often the case with entrepreneurs, Koppel’s problem-solving cogs started whirring.
Fast forward to 2015, and the launch of mobile-only banking app Monese. It now has 500,000 customers in 20 countries around Europe – impressive for a company which has only been running for three years.
The selfie era
Koppel is thorough in every answer, leaving no stone unturned. And that’s the perception I get about Monese too – that everything has been considered and planned very carefully.
Of course, for security purposes, it’s crucial that financial institutions verify the identity of their customers. But while most banks ask for a proof of address in paper format, the regulations aren’t as rigid as existing banking processes would suggest. “It was very liberating to find that regulators are open to innovation,” says Koppel.
“So I thought: how can we improve this process, make it digital, and help more people get access to the banking system?”
This entrepreneur and his team have done just that, by allowing users to verify their identity by simply taking a selfie and uploading a photo of their passport or national ID card, creating a bank that lets you open an account online in just 120 seconds (which, Koppel points out, is “quicker than boiling an egg”).
Everything in my life was going well, but I was being treated like a second-class citizen
That doesn’t mean it skimps on the security. You could even argue – as Koppel does – that Monese is more secure.
“When customers walk into a bank branch to open an account, they show their passport. While the untrained human eye is not able to differentiate between a real and fraudulent passport, our scanning process is roughly 25 times more accurate than a human’s – so we are providing technology where humans fail.”
The tech that underpins Monese might be complex, but the trick is making sure that the app is as simple as possible for the users.
Indeed, since fintech firms burst onto the scene a few years back, their popularity has been driven by their ability to make everything easier, cheaper, and faster for consumers, who are fed up with clunky processes associated with the big banks.
That’s not to say building a bank – particularly a cross-border one – doesn’t come without its challenges. “As a financial services company, you have to take regulation seriously, which means you have to be on the top of your game. Fintechs have to massively overdeliver to be successful, and for us, we are obsessed with customer service. All the challenger banks know this, but I don’t think the old guys know about it yet,” Koppel laughs.
Monese is essentially designed to help people who are excluded from financial services, and so it doesn’t surprise me to learn that the typical customer is a migrant – someone who has moved to another country in the hope of creating a better life for themselves.
“We were focused on the global mindset, we are building a service for people who want to roam the world and not be held back by anything. They can pick the job and location they want, without being held back by archaic policy and bureaucracy. We call them the unstoppables.”
With the tap of a button, users can instantly switch between 10 different languages. Koppel says this makes it a “truly localised product” – you can live in Germany or France and you wouldn’t know that the Monese product is made in Shoreditch.
This Brompton bike-riding business owner shows me what he describes as the “really cool part” of the app, which allows users to have multiple bank accounts, each in a different country, with their own balance and debit cards. “It’s not just a multi-currency support and cheaper FX rates, it’s an actual account you can use as your main salary account.”
If opening a current account is such a struggle for migrant workers, imagine how hard it is to get credit.
Koppel tells me that his banking saga continued once he decided to permanently move to the UK, but didn’t qualify for any kind of credit card. “Here I am building a banking service, getting a decent salary, trying to support a family and three kids, and the only credit card I could get was incredibly expensive.”
Again, Koppel saw vividly how this problem could be turned into an opportunity by giving users access to better credit products.
Collaboration is already on the cards, as Monese, will be partnering with other banks and lenders, which will offer their credit products through the app’s marketplace. “We can see customer transactions, so we know whether we can rely on these people to pay money back. So, provided the user gives us consent, we can share their data with the other banks. This means the bank’s decisions aren’t being made in the dark, and the customer can get a service where they normally wouldn’t.”
Koppel recalls how people thought fintechs were going to take over the world, while the big banks would “drop dead and die”.
That, of course, hasn’t happened. But the big banks have finally noticed that a fintech revolution is taking place, and now see the value in working with these new players – as the old saying goes “if you can’t beat them, join them”.
The rapid increase in globalisation and technology make the problems in the banking system seem archaic, if not ridiculous.
Monese is a bank that exists for the now, embracing our borderless world.