[polishninja]

Better software can only get you so far in banking. At the end of the day, they need to borrow and loan profitability and provide services at a low cost. In addition, they need customers, which are not easy to acquire for a new bank. Not having physical branches is definitely a cost saver; however, I’ve seen some surveys that indicate people still want access to some sort of physical branch.

According to their previous Techcrunch article [0], they are writing their own full-stack banking software. Writing your own banking core, external facing software, and internal process software is a massive undertaking, especially dealing with all the regulation and certification processes with third parties. You then become not only a bank but a specialized software development shop as well. Something traditionally only the big banks can afford. I’m not sure, given they are a bank and software business, that their cost base is 1% or 2% of a traditional bank, as stated in their article [0].

I hope they build something awesome but I think to do something of this size will take more than a few million.

Disclaimer: I write banking software.

[0] http://techcrunch.com/2015/06/30/mondo-gets-passionate/

[neximo4]

One thing that's quite nice about what they're doing, and rather profitable is the OD system.

With a credit card you have a seperate account, so when you get cash it doesn't have to pay off the card.

With mondo it is a debit card with a current account which can overdraft and interest rates near a credit card (19.9% according to their papers)

This means there's less risk for them and a smaller chance of NPLs as money needs to be paid off to the OD before the account is positive.

While a normal bank can take this view in the aggregate term of a customer's account it encourages the user to engage in more risk taking where the customer can't pay it back.

So you get less risk and the same interest rate.

That being said they do save a lot on software building it in house contrary to hiring someone external to do it for them. If Oracle's standard margin are any indication there's a lot lost this way in terms of cost.

[phillc73]

> With mondo it is a debit card with a current account which can overdraft and interest rates near a credit card (19.9% according to their papers)

What's the advantage here? With my Smile account I have a Visa debit card linked to my current account, with an agreed interest free overdraft for a certain amount and then an additional overdraft on which I pay interest.

Why would I switch to Mondo?

[neximo4]

1) No fees using the card abroad. Exchange rate 'at cost'.

2) No fees using any ATM to withdraw cash (AKAIK when I asked the Mondo guys)

3) Instant notifications when you make a purchase and the ability to switch on and switch off the card. So you're never blocked when you purchase Christmas presents and weirdly spend more one week.

4) They have a nicer app that helps you track how you're spending and your habits are changing. They've even managed to put in logos for each merchant. I know that's hard because I've done it for my startup -(for example a mom and pop pharmacy)

5) Easy integration into transferwise and other apps where you can get loans from banks in a marketplace so you get the best deal. In general there's a whole lot of benefits to the APIification mondo offers. It avoids doing what everyone does by just sending you off and integrating with others who do something better.. Credit Cards? Loans? FX transfers. While I don't know the details this is what I got from their marketplace vision.

6) Sign up using something like Jumio, or Jumio? (Not sure i don't have Mondo, wish I did- so if you're reading this give it to me!) so it takes 30 seconds and no need to visit a branch.

Ultimately its your choice but they have a pretty cool thing they're building.

I might want to point out I have nothing to do with Mondo. I love their idea but the way you asked that question suggests I may be implying that, but I don't have anything to do with them.

[diskcat]

Yeah. The majority of the people are normals. Just as they wouldn't trust a quantum random number generator to replace the spinning ball contraption for lottery drawings, they would not trust a 'branchless bank'.

There is something affirming about a tangible building especially when it comes to money. And that's why bitcoin will never replace shiny transition metal.

[skrause]

"Branchless banks" are nothing new. In Germany we call them "direct banks" (https://en.wikipedia.org/wiki/Direct_bank) and in 2012 they already had 15.8 million customers which is around 20% of the population. And the number of customers has only been growing since then. Most people who are only using online banking and ATMs anyway don't really have a need for branches anymore.