In a way, it’s the end of an era.
When Brett King founded Movenbank in 2011, it was one of the first of a new breed of mobile-only, low-fee banking app providers with a sassy, anti-bank attitude. King was named Innovator of the Year by a sister publication of American Banker the next year in recognition of Movenbank’s customer-friendly, convenience-centered approach that at the time was new and a clear alternative to traditional branch-based banking.
Since then, many rivals have followed, including Digit, Chime, Varo Money, Even, Dave and Qapital.
This week, King decided to shut down the challenger bank (which over time became known simply as Moven). On Wednesday, Moven began notifying customers that their accounts will be closed by April 30.
However, its sister unit will go on. King has been growing its enterprise software business, Moven Enterprise, beyond its charter customers TD Bank and Westpac. It recently signed an agreement with the Saudi Arabian fintech STC Pay, and it will soon offer its mobile banking, budgeting and wealth management software to U.S. banks.
In an interview, King explained the events that led to this decision (including a plan to spin off Moven the challenger bank that was foiled by the coronavirus outbreak), how he plans to move the company forward and what it all means for other challenger banks.
This must feel strange, on top of everything else in the world being so strange. Do you feel sad about having to shut down Moven? Or do you feel like you accomplished what you wanted to with your neobank and now you’re ready for a new chapter?
BRETT KING: It’s like losing a sibling in some respects. Then again, it isn’t.
You’ve still got the software business.
It’s not like we’re shutting down the business, right. Moven Enterprise right now looks pretty healthy, and it looks like we’ll have more demand. One of the reasons for this change is we were planning to spin off the direct-to-consumer business. We had funding lined up, and then the coronavirus hit. At that point I had to make a decision: Do we try and survive with the challenger bank until we can see if funding reappears, or do we cut our losses? If we continued with the challenger bank in the current form, we probably would have had to absorb something like a $2 million loss this year.
Is that because you don’t charge much for the service?
Yes. And we haven’t launched credit offerings yet. We had a joint venture lined up with a bank that would require funding. That funding has disappeared, and there was no indication it will ever come back.
Is it that funding dried up, or is it that you felt like this just isn’t the right time to go out and pitch this because everything is so uncertain?
When we went out to talk about financing and credit raising, most of the conversations we had were, “We’re just going to wait and see, it’s pencils down right now. We’re not doing any new deals.” And so we didn’t know when that would return. So the risk was every month that we continued to run the business in its current form and not the form that we had planned to, we were absorbing losses that may result in us cutting staff and not being able to support the commitments we’ve made contractually to the enterprise business.
There could be life in it yet. A few things have come up in the last couple of days that we’re working on. But ultimately, I’ve got a bunch of staff here that are all at risk because of the coronavirus and the downturn in the economy. And I felt like I had to make the decision that was least risky for the team overall and for the clients we have on the enterprise side. I wish we could have found a different way out of it.
Is Moven a canary in a coal mine? Do you think we’ll see other challenger banks forced to shut down in this pandemic?
There are two sides to the coin. The one side is, yes, funding is going to be tough. So I do expect that you’ll see the Revoluts and the Monzos and the N26s talking more conservatively about their growth. I think they’re going to be thinking about making the money last longer. But on the flip side, they may get more organic growth because people are no longer able to go to the branch and do their banking in the traditional way. They may find that these new competitors offer clear digital differentiation. So I think there’s a yin and a yang there that sort of need to play out.
Is there anything you would do differently if you were to start all over again?
It was a timing issue. We were just a little bit early with the challenger bank. If we’d started in 2013 or 2014, just a couple of years later, I think our funding cycle on the direct-to-consumer side would’ve been very different. So pragmatically we had to look for revenue. And there were investors that thought the direct-to-consumer business was a great idea or the enterprise business was a great idea. Often over the last couple of years when we’ve had conversations about investments in Moven, the enterprise guys said, you’ve got to get rid of direct to consumer, it’s of no interest to us. And then there were guys on the other side who said, lose the enterprise distraction, just focus on direct to consumer. That was the unique challenge that we had, that divided attention between the two business units did represent an ongoing funding challenge.
For our investors, the good news is, we are still a going concern. We just did a major deal in Saudi Arabia, so Moven Enterprise is healthy and robust. But we had to make a tough decision this week.
What is next for you? Do you plan to approach U.S. banks with your software now?
Absolutely. That’s the strategy for us. We’ll be launching into the U.S. market. So that’s a huge opportunity for us. Hopefully we will be able to affect the lives of many more Americans with our technology with this sort of distributed approach.
One last thing: I’ve always wondered how you do it all. You write books, host a weekly radio show [“Breaking Banks”], do public speaking and you’ve been running three companies, now two companies [Moven and Provoke, a media company]. Do you have any time management or organizational advice?
I always think I could be working harder, but everyone around me says, you work so hard. But if you look at a lot of what I do, it’s connected. The radio show works off the back of the books and the content and the network that I’ve developed. It is supported by my knowledge as a result of having [run a company] in the fintech space. The books are probably better because I’m actually a practitioner doing a business. I would hope on the speaking side it’s the same. It’s all sort of connected and related in a virtuous circle. I also have a great team around me.