Another week, another new bank launches in the UK. This time, Chetwood Bank arrives with more behind it than your standard startup as it brings £150m in investment and a banking licence. Patrick Brusnahan speaks to the co-founders of the bank to see if Chetwood can offer something that doesn’t already exist in the market
Founded by Andy Mielczarek, the former deputy head of HSBC’s UK retail bank, Mark Jenkinson, who has had stints with Temenos and Capco/FIS, Chetwood needs to do a lot to stand out in the increasingly congested marketplace.
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The differentiator here is a focus on products, rather than experience.
Chetwood’s product value
Mielczarek explains: “One of my frustrations in my years of working on products was how hard it was to change products in a traditional bank because the technology is so big, old and unable to change.
“What we think we’re doing differently is to start really focusing on the manufacture of the product. We can do it quite quickly and the best way to do things differently is to start from scratch and use brand new technology to do the unfashionable business of ‘how do we do products?’
“A lot of folks are releasing new apps and new experience, but under the hood, it’s pretty much the same products that they always have been.”
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By GlobalDataLoans and lending products are Chetwood’s main area of expertise and Mielczarek wants to deliver “dynamic products” for “dynamic customers”.
“We wanted to have a really flexible architecture which would then allow us to do all the things you need to do to lend customers money, but in a separate, modular, modern way,” he adds.
“The way the market works today is they look back at six or seven years of how you behave, crystalise on a view of your credit worthiness and that stays with you for the whole life of the product. We think all three of those are wrong in the modern world.”
Chetwood wants to have regular up-to-date looks at credit risk which can evolve over time. As it changes, so does the product. The goal is to have “hundreds of different price points” and each customer can be priced specifically.
Partnerships
While many startups announce their plans and intentions before receiving a licence or funding, Chetwood already has these. Mielczarek states: “We won’t be on the road fundraising every couple of months and we can focus on customers.”
Lending is also possible because of its already acquired £150m of debt and equity investment. Post-mobilisation, Chetwood will then launch retail deposits.
However, the bank is not trying to compete with others, at least not in the traditional sense. Describing it as a “B2B2C business”, the co-founders want to partner with other firms that have a user base and offer their products to their customers.
Mark Jenkinson says: “The old model of getting customers, trying to get them to stay and try to cross-sell them as many products as possible is not our model. Our model is to create great products and get it out to as many people as we think that product serves.
“The importance of that in this world is that we’re not trying to build a massive customer following in a Monzo style to sell them different things and make money at some point. Our products stand alone and have to be able to stand alone. It’s a different model to traditional banking.
“We believe that if we can manufacture the product, there will be many distributors of those products. People are building marketplaces and apps for education or money management and all of them want a product. We don’t want to be the Amazon of banking; we want to be the product on the Amazon of banking.”
Relationships
Many in the financial sector do not mind collaboration as long as they are the ones that own the customer relationship. Chetwood are aiming for something else; “the product, not the relationship”.
“Philosophically, we are not trying to own customers,” Mielczarek explains. “We believe in today’s day and age nobody owns customers anyway.”
Jenkinson adds: “It’s a dying journey. It’s a declining trend and we’re trying to work against that. You can have a great product with a great experience, but once they don’t need that product, you’re not in their lives. The problem with banking is that it tries to be in your life when it offers substandard products.”
One thing that is clear is that the team behind Chetwood want to be a bank. Many newer players do not see a banking licence as necessary to serve customers.
Mielczarek concludes: “I know people that have spent a lot of time finding creative ways around regulation and avoid becoming a bank. Our experience has been positive through the regulation and working with the regulation. That is there to protect customers and we want to do that too.
“I don’t see being a bank as a problem at all.”
