Hot startup bank Mondo must raise at least £15 million ($22 million) later this year to gain its full banking licence.
Mondo, which crowdfunded £1 million in just 96 seconds earlier this year, is in the process of applying for its full licence and hopes to have a “restricted licence” within two or three months. This is a sort of probationary licence that allows Mondo to prove to regulators it is ready for a full licence.
CEO Tom Blomfield told Business Insider: “The restricted licence is a way of signalling to the market that they are [the Bank of England and regulator Financial Conduct Authority] minded to approve you, so you can then go out and raise the capital you need to launch. It is sort of a test phase.
“We will need around £15-20 million to get those restrictions lifted. We are having one or two conversations now but we will leave the real fundraising towards the end of the year.”
Blomfield says the £15-20 million figure has been agreed with the regulator as a condition of having its restrictions lifted. He added: “We were trying to solve this Catch-22 problem before where to become a fully-authorised bank you needed a tonne of capital but to get a tonne of capital the investors wanted to see that you had a banking licence.”
Mondo, which was valued at £30 million in a fundraising earlier this year, has to date raised £8 million from crowdfunding investors and London seed fund Passion Capital.
‘They’re looking for breadth and depth’
BI heard from two sources close to Mondo that Britain’s financial watchdog — the Financial Conduct Authority (FCA) — has been querying Blomfield’s role as CEO given his lack of banking experience and could ask him to take a less prominent role in the startup bank.
Blomfield played this down, saying that staying as CEO is “absolutely plan A at the moment but, to be honest, my top priority is launching Mondo as a bank and nothing is going to stand in the way of that.”
“The feedback we have had so far — they asked me to appoint a deputy CEO. My cofounder, Paul Rippon, we appointed deputy CEO some months ago now. He has been in banking for 23, 24 years now. He started in the branches of Natwest.”
Rippon, who has also worked at Lloyds and Northern Rock, joined Mondo as the chief risk officer last February but was promoted to deputy CEO last August.
Blomfield says: “It is no different to other banks they are [the FCA] authorising. They are looking for breadth and depth of banking experience. That is both on the board and in the exec team. If you look at Tandem [a rival startup bank] for example, Ricky Knox is not the CEO there, they have appointed a professional CEO.”
Mondo has 150 years worth of retail banking experience on its board, according to Blomfield, and another “50 or 60 years” on its executive team.
Blomfield says: “As it stands, I went through my senior manager’s regime interview with the FCA and the Bank of England about two weeks ago as CEO. We will see how that goes. But any new bank needs breadth and depth of experience. “
He added: “Clearly I’ve not worked in a bank but I have a development plan to upskill in that area.”
Prior to cofounding Mondo Blomfield cofounded direct debit startup GoCardless. He worked in management consultancy before that.
However, unlike its rivals, Mondo is yet to be fully licensed by the Bank of England, meaning that at the moment it is only able to issue pre-paid cards that have money loaded onto them through the app rather than debit cards. The startup revealed last week that it is having to change its name over a trademark dispute.