Mobile-only bank Monzo is exploring whether it could form a mortgage lending marketplace with bank and building society partners, its co-founder Jonas Templestein revealed.
However, speaking at the Building Societies Annual Conference last week, Templestein (pictured) all but ruled out offering mortgages directly.
He said: “Mortgages is very, very difficult. I would go so far to say I honestly can’t see it happening [providing them directly].
“There are other kinds of loans maybe, but mortgages are so specialist and the capital implications are relatively high.
“There’s a whole mutually exclusive other path we could go and we are investigating more of a lending marketplace model, which perhaps also scales more easily internationally, because you could enter the market with five savings partners and five lending partners and have a fairly full featured product experience.
“That is a lot of easier to do than if you go in and start trying to originate mortgages in five different countries.”
Templestein defined Monzo as a relatively young company with a limited risk appetite, especially in the current climate where challenger banks are finding it harder to secure profitable business.
He added: “If you are a two-year-old business, signing 30-year contracts is not a great idea generally speaking, as you just don’t know if that’s exactly what you want yet.
“And signing 30-year mortgage contracts with lots of customers is the best way of backing yourself into a corner.
“There are other organisations that are much, much better at that than we would ever be.”
Monzo was founded in 2015, while it gained a banking licence in April 2017, allowing it to offer its own current account.
Appealing to building societies
Templestein appeared at the Building Societies Annual Conference in a clear bid to introduce the prospect of working with societies as savings partners.
And while his speech attracted a packed-out audience, in the Q&A afterwards there seemed some debate over who would own the customer if they used a building society through the Monzo app.
In his speech, Templestein said: “The relationship with the customer is owned by Monzo; it goes through the Monzo app.
“This is a separate source of funding where you could say ‘we need to increase our deposit base’ and then Monzo could bring in new funding from a different direction.
“But the experience would be through the Monzo app. In fact that would be one of the value adds, because you don’t have to deal with the customer service or anything else that may have to deal with the lifecycle.”
Later, when asked by an audience member to clarify who would own the customer, he added: “It depends a little bit on the definition of customer, so maybe the argument could be made for both.
“The access to the product would go through the Monzo app. But for example the Financial Services Compensation Scheme protection would come from the partner side.”