I'm working on a new book project. You might have spotted the themes in my recent blog entries but, if not, it's all about purpose. The tagline is: if you don't stand for something, you fall down, and is focused upon stakeholder capitalism. ESG, CSR and all that stuff and more. So, I've been watching for leaders who talk about purpose, and recently picked this up from Tom Blomfield, the founder of Monzo.
“Why do companies even exist? What are we here for? We have to be profitable and sustainable. But you also need to think about our impact on society and environment. If we don't do that, we make a bunch of profit and screw everything else up.” Tom Blomfield, Wired Magazine, February 2020
Since then, Tom stepped down as CEO of Monzo and, just last month, left the business due to concerns over anxiety and mental health. I decided this was therefore a good time to reach out to him for a chat. Tom and I have had many meetings over the years, and I wanted this discussion to be everything about purpose and nothing to do with what was going on with Monzo. In that context, here is our chat. I'd be interested in feedback.
Monzo’s purpose is: Making Money Work For Everyone
Tom Blomfield, Founder of Monzo
Chris: What does purpose mean to you?
Tom: It’s the “why”, I guess. If you watched any of Simon Sinek’s videos. The why is the meaning that connects the people to the company. Even if you don’t believe in purpose, every company produces what economists call “externalities” – the impact they have on their surroundings, whether that’s the environment or their customers or their neighbours or even society at large. It might be a small business that chucks its waste over the fence intentionally or lets it leak it into a river without really thinking. Or it might be a really big business, like Facebook, that’s one of the largest connectors in the world, that potentially endangers free elections without ever intending to. You have these externalities whether you like it or not. And they can be positive or negative. Being conscious of those externalities and then trying to ensure that they are working for the public good is key. What impact do you have on the world and society around you, your customers, your employees?
These externalities exist, whether they are a conscious choice or not, and so it’s better that they are intentional rather than stumbling into something and realising that you’ve had this pretty horrific impact on the world.
I don’t think you can have businesses that aren’t purpose driven or are purpose driven. Everyone has these effects and side effects, so I think it’s best to be purposeful and have a clear intention about your purpose than not. If you embrace that, then there are a huge number of benefits which ensue.
Chris: How do you end up picking the right purpose?
Tom: It needs to be close to your core business and that can be harder or easier. Monzo has a purpose to Make Money Work For Everyone and that encapsulated our ambition. Everyone means everyone in the entire world. You can take that as a sign of megalomania but really making money work for everyone means that it has to include the financially excluded; homeless people, people who have arrived in this country without passports, as refugees. So for us, it was about financial inclusion. The key is that your purpose needs to be connected with your core business, otherwise it feels like it has been bolted on afterwards.
Chris: When you look at large international conglomerates, many have morphed into a faceless company that doesn’t really have values or purpose. Can they create one?
Tom: I think it’s probably easier to start when you’re small, and bake it into everything you do. It’s harder to retrofit. Take Google as an example. Their unofficial motto for many years was ‘Don’t Be Evil’. To me, that sounds like they’re saying ‘We’re Not Going To Intentionally Trash The World’, but it’s not a positive statement of intent. It’s a low bar - they seem to be happy with decisions that appear amoral. Certainly not immoral, but not moral either. But without deeply considering the consequences, these amoral decisions tend to have repercussions. So I would much prefer a statement like ‘Leave The World a Little Better Than You Found It’ over ‘Don’t Be Evil’.
Chris: How do you balance purpose and stakeholders with shareholder return and return on investment?
Tom: I think Generation IM, Al Gore’s investment fund, provides good evidence that “purpose” and “profit” needn’t be in conflict. Generation’s entire investment thesis is that long-term sustainability drives revenues, profitability and competitive positioning, and they’ve delivered terrific returns over the last 20 years.
When you’re struggling as a company, there’s the temptation to cut salaries, to make redundancies, perhaps to cut back on your purpose-driven expenditure. These are short-term measures companies use to try to restore profitability in a crisis. Sometimes they’re necessary. But I don’t think they’re sustainable for the long-term.
Chris: Steve Jobs always said innovate out of a crisis.
Tom: If you’re Steve Jobs, you get to play by your own set of rules.
Chris: How did your purpose play out in the Monzo story?
Tom: We’ve had some real successes but we’re not perfect, by any means. There were people we couldn’t give bank accounts to because, ultimately, they fell outside our risk appetite after vigorous discussion at the board and with regulators. That was sometimes disappointing. But, nevertheless, I think we did a lot of good.
One example is in debt management. We introduced the first gambling block in the UK, which was effectively a way within the app to self-identify as someone who wanted to stop gambling. You’d flick a switch, which would explain to you that Monzo would prevent, as far as is possible, any transaction going through to a casino or a bookmaker or a slot machine. It would decline the transaction if you tried to gamble. If you wanted to re-enable, it would take 48 hours - a cooling off period, which is really important.
This feature came about, not because someone in the corporate social responsibility team thought it was a good idea or the PR team or me or any of the management. It was two people working in our vulnerable customers team. We have a specific team who just work with customers who have vulnerabilities of various kinds. They noticed that we had customers with gambling problems, and that it was really affecting their lives. They talked to a few charities and came up with this simple, but really impactful idea.
It wasn’t a complicated piece of software to write – we built it in a handful of days with a couple of engineers who volunteered their time – and got it through all the right approval processes and launched it. It’s been absolutely phenomenally successful. We had hundreds of thousands of people enabling the block, and we saw a reduction in gambling behaviour amongst that group by 70% or 80%. Some people would re-enable it eventually, but the key is that we helped to create a 70%-80% reduction in gambling behaviour amongst a group who self-identified as problem gamblers. We had quite public case-studies.
There’s a guy called Danny Cheetham for example, who had got really into quite a bad debt as a result of gambling problems. He was able to talk about it, but had never been able to get on top of it. Finally, with the help of Monzo’s gambling block, and a lot of hard work on his part, he’d started to claw himself out of debt. That, for him, is absolutely life changing. It came about because some people on the frontline of Monzo identified this opportunity, saw that it resonated so strongly with our values, and decided to make it happen. To me, that’s the importance of your purpose and values. It’s not from the top-down. It’s in energising that belief in everyone who works for the company.
There was no real profit to be made but, under that mission of ‘Making Money Work For Everyone’, it became important for us to do that.
Chris: Do you feel like purpose was important to you because you were of a certain age when you founded Monzo, or do you think it would be the same and would resonate no matter what age you are?
Tom: I think it resonates with all ages, with everyone. For our staff, the purpose means something. In fact, some people would say, in job interviews, that they were here because of our purpose. They would say that they had read an article or blog post on the work Monzo was doing with financial inclusion or problem gambling, and that they wanted to be part of something that does good. That wasn’t just young people. We had people in their 50s and 60s joining who, having worked a whole career in banking, wanted to make a positive difference.
Chris: When you look around the world that you are in today, do you think that financial services works?
Tom: Not yet. I think Monzo has made some progress. I’m really proud of the things we’ve built, but there’s a long way to go. More and more people from traditional financial backgrounds are talking about these things now. Mark Carney, after he left the Bank of England, has spent a lot of time talking about the environmental impact of investment decisions. More and more people are getting it, but there’s just such a long way to go.
Chris: What would you say are the key things from your experience looking ahead, that we need to change to make banking work better for society and the planet?
Tom: With the rise of technology, this isn’t banking or finance per se. It’s about inequality in society and the economy. Fifty years ago, you might have studied and worked hard and become the best doctor or plumber in the town, and you made a nice living thanks to your talents. Today, a small group of people can build a new technology-enabled service that’s better than the competition, and then scale it around the world relatively quickly. Because of the availability of the internet and technology, it becomes a global winner-takes-most market. Of course, you still had great wealth and inequality in the past, but the situation is getting worse, and the speed with which fortunes can be created today is astonishing.
Take the example of Google. I don’t think they’re perfect, but I still think Google is a net positive to society. As a consumer, having access to free maps and email and brilliant search, actually is worth the price of seeing some Google ads. I would much prefer Google to exist than to not exist.
Crucially, though, the economic benefits of Google accrue to a very, very, very small number of people. It created a handful of billionaires and several thousand multi-millionaires – early software developers and execs mostly. The issue is that anyone else who doesn’t have their incomes indexed to tech stocks faces this huge inequality gap. I think this is going to become more and more problematic. I think we need more effective taxation of extreme wealth and then a programme of redistribution, especially to fund healthcare and education. I don’t think we’re yet ready to fund Universal Basic Income, but free high-quality healthcare and education gives people a good start - it’s essential to equality of opportunity.
What this means in financial services is offering products and services for people’s day-to-day lives, rather than focusing on the big products like mortgages, which are out-of-reach for so many people. It has improved over the past five years, but much more focus on great day-to-day transactional banking for people who are living pay-cheque to pay-cheque will be critical.
Chris: Will purpose-driven businesses be more successful than those that have no purpose?
Tom: They must be. The choices consumers and employees make will dramatically favour those companies and brands with purpose, especially if they can show that they genuinely live that purpose. Too many companies just talk about a nice mission statement and don’t back it up with action. It is clear that this will have an impact over the coming decade or two.
 Simon Sinek, best-selling author of Start with Why 2011 and more
Why are some people and organisations more inventive, pioneering and successful than others? And why are they able to repeat their success again and again? In business, it doesn't matter what you do, it matters WHY you do it.
 See Gambling: 'A banking app helped me beat my addiction', BBC, October 2018 https://www.bbc.co.uk/news/uk-45652429
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...