The CEO of fintech dev platform TrueLayer has accused Monzo founder Tom Blomfield of “putting the work of many in the trash bin” with “inaccurate” comments on open banking.
The issue that has divided the two fintech executives dates back to the mid-teens. Open banking was announced as policy in 2016 and made law in 2018, with the idea of boosting competition in the European financial markets. British banks are still subject to open-banking rules post Brexit. The idea of the rules was that forcing banks to open up their data to startups would empower new innovators to produce better services.
However, in March 2020 Monzo’s then-CEO Tom Blomfield, one of the most prominent figures in the new challenger fintech sector, claimed that open banking hadn’t produced any innovation at all.
“The positive effect of open banking on innovation has been nil,” Blomfield told The Telegraph. “I don’t see any businesses based on open banking in Europe whatsoever.”
Instead, the neobank founder argued that the only tangible result of open banking was that it had imposed “massive costs on [challengers] like ourselves to implement standards nobody uses.”
One year later, the CEO of open banking startup TrueLayer still takes issue with Blomfield’s statement.
“I would still find the quote from the former CEO of Monzo, honestly, very catchy for the media, but fairly inaccurate in reality,” Francesco Simoneschi told Verdict in an interview on Tuesday. “And I was surprised to hear an executive and a forward thinker, such as Tom, just put the work of many in the trash bin so quickly without a deeper analysis that I think he is very capable of doing.”
Instead, the TrueLayer founder argues that open banking has been evolving, albeit slowly, in the background.
“The reality is that there was this accelerating rate of improvement, it’s just that was barely noticeable in the earlier points,” Simoneschi says. He expects that 60% of the UK population will use open banking products by 2023.
Simoneschi does admit part of Blomfield’s point: traditional banks, in his view, have been slow to see the benefits of open banking – such as improved digital onboarding services and smoother credit checks. Simoneschi agrees that banks needed pushing to make use of these.
However, Simoneschi adds that banks’ focus on compliance overshadowed the need to create better user experiences. In short, the banks were only “going to do exactly the minimum [to] tick all the boxes for compliance.”
He argues that banks are now increasingly realising that open banking can provide better user experiences. Following Covid-19, digital services enabling customers to access financials from the safety of their homes rather than going into physical branches have become must-haves for banks. So, while they may have been slow to get started, Simoneschi believes open banking is quickly gaining momentum. Now the banks can more clearly see the future and benefits of open banking.
“That wasn’t really clear just two years ago. Now the way is more easy to understand,” he says.
Blomfield left Monzo in January after a disastrous year during which the challenger bank saw its valuation sliced by 40% and suffered massive job cuts. He left, saying it had been detrimental to his mental health.
Verdict has reached out to Blomfield for comment, but received no reply prior to the publication of this story.