A first-of-its-kind app-based bank with no branches or online banking has won a banking license to operate in the UK from next year.
Atom Bank, a disruptive startup based in Durham, UK, is looking to provide banking services solely via its smartphone app, currently in the construction phase. The project represents the second foray into challenging the traditional banking model for co-founder Anthony Thompson, who also co-founded Metro Bank in the UK.
Atom announced the successful license award on Twitter June 23:
It's official, WE'RE A BANK! t.co/xZaY95z4cs— Atom Bank (@atom_bank) June 24, 2015
CEO Mark Mullen, formerly head of telephone banking at First Direct, said in a recent interview with Business Insider that the market was ripe for change and that apps were leading the way:
“Attitudes to banking are changing much quicker than any of us could have expected. There's a whole generation of people for whom apps are the internet.”
While Mullen has remained secretive as to the exact nature of the product, he noted that Atom would be “a very different bank in many ways,” something already visible from its strategy of having no physical branches and no website facility.
Features such as biometric security, 3D visualizations and gaming technology will add to the personalized experience it will be possible to create for each customer, Mullen continued.
“It will offer total control and transparency with a depth that is beyond anything else on offer in the market today,” he said. “… Our inspiration is not coming from banks. You don't go to the banking sector for technological excellence.”
Nonetheless, certain arguably core facilities will still be tied to the brick-and-mortar traditional banking setup Atom is trying to overtake. Deposits and paying in of checks, for example, will be done via a partner bank in the UK, talks for which are close to concluding, Mullen says.
Thompson meanwhile has ambitious market infiltration plans once Atom is up and running, telling UK newspaper The Telegraph that “In four or five years’ time, we want to have 5pc of the market.”
The company’s initial task is to raise the £75million required to meet legislation surrounding capital. Investors have so far included venture capitalist John Moulton and Goldman Sachs asset manager Jim O’Neill. Star fund manager Neil Woodford, who had previously stepped back from the banking sector citing worries over fines being accrued by operators, has returned, leading Atom’s £25million funding round to see him become the startup’s biggest shareholder.