Startup app-only bank Mondo just made a crucial step in becoming an official bank after being granted a restricted banking licence by UK regulators.
Mondo is claiming the decision makes it the youngest-ever bank to be licensed in the UK, given that it only started up in February of last year.
Mondo aims to create a digital-only bank for the mobile generation that offers things like instant notifications of transactions and balances, a detailed Facebook-style feed of what you have spent your money on, and a breakdown of spending across the month.
Co-CEO and founder Tom Blomfield says in an emailed statement: “This is how the banking market changes, not with 800-page reviews from public bodies like the CMA, but with technology bringing new ideas to the table. We’re creating something that will completely revolutionise the way people think about their money.”
The 45-person company has been operating an early version of its product tied to a pre-paid card. It has proved hugely popular, with 30,000 customers spending £20 million ($25.9 million) on the cards since launch. Mondo also has a waiting list of 200,000 and the startup crowdfunded £1 million in just 96 seconds earlier this year.
The restricted licence will let Mondo hold customer money for the first time — the crucial thing that makes a bank a bank — and let it test its products and services with a limited number of customers. Once regulators, the Financial Conduct Authority and the Prudential Regulation Authority, are satisfied, they will lift the restrictions.
Blomfield told Business Insider earlier this year that Mondo will also have to raise at least £15 million to get the restrictions lifted, as part of capital requirements. Mondo has to date raised £9 million and is valued at £30 million.
Mondo is one of a number of so-called “neobanks” in the UK: app-only banks with no branch network. Three others have so far been granted licences: Atom, Tandem, and Starling. Atom is the only one that has so far launched to the public, releasing a savings account earlier this year.
Mondo is also in the process of changing its name, after a legal dispute over its current one. The startup asked customers for suggestions 2 months ago and an announcement on the new name is expected in the next few weeks.