Alastair Lukies - Monitise

Monitise might not be a household name – at least not yet – but the company, which connects the banking world with the mobile phone world, is expanding so rapidly that consumers around the globe are already using its technology.

The AIM-quoted company, which was founded by Alastair Lukies, has already signed up most of the UK’s major banks and mobile phone operators, and is now expanding internationally and into new business arenas.

The Monitise service is marketed as Monilink in the UK and around 60 per cent of bank customers currently have access to the service – banks include HSBC, NatWest, Royal Bank of Scotland, Lloyds TSB, Alliance & Leicester, first direct and Ulster Bank.

 Lukies came up with the idea to connect the banking world with the mobile phone world so that customer payments could be made in 2002. He describes his idea as ‘more serendipity than strategic genius’. And yet he hit on a market that is growing exponentially: Juniper Research predicted that more than 41.4bn financial transactions will be carrier out by mobile phones by the end of 2011.

Despite being a start-up with no track record Lukies and his Monitise co-founder Steven Atkinson succeeded where the mobile phone industry had previously failed. “It looked logical,” says Lukies of the opportunity. In fact the mobile operators had come up with their own version of a mobile phone payment system but the banks did not trust them. Lukies tackled it from a different perspective and realised that the key to making his business work was to get the banks onside.
From the outset the Monitise team was convinced that their idea and the simple technology that underpinned it would be accepted by the banks. “We spent the first six months listening to people,” says Lukies.

But even listening to the concerns of the banks did not help the Monitise team understand the nitty-gritty of banking regulations. Lukies admits he underestimated the complexity of dealing with the banks and navigating their security requirements. He points to one bank that took three and a half years and 279 meetings to convince.

But Lukies’ determination to turn his idea into a reality is proof that successful entrepreneurs don’t give up – especially if they have come up with a means of transforming an industry.

He says: “I am a passionate believer that the great ideas will come from small companies rather than big because they need their own life to breathe. And then they need scale.”

Lukies recognised that big companies can help smaller enterprises to transform their innovative ideas or products if they recognise an idea is good and that it can be scaled – and then help scale it.

It is a strategy that Monitise has successfully employed. It was incubated by the IT giant Morse, which gave it a track record, financial capital, and crucially the credibility needed for negotiations with the mobile operators and the banks. Lukies admits this was an important part of the early success of Monitise.

He says: “We were clever with the capital raising. We became part of a £300m company with public shareholders. You can inherit a track record. Companies can fall down if the structure of the company is not set up to do business with big companies.”

Even with the might of Morse, Lukies still had to overcome hurdles to get Monitise off the ground.  He had a contact at Link, whose ATMs were used by the UK’s High Street banks, and this gave him a head start in persuading the highly security conscious banks that they could work with the mobile phone companies. But even this apparent advantage did not help Lukies navigate the complex labyrinth of red tape that came with dealing with the highly security conscious banks.

In fact Monitise succeeded because it was small enough to adapt when it needed to in order to comply with what the banks required. Lukies says: “Small companies can reinvent themselves and be more flexible. It does not mean you always win, but it means that you come at things from a different angle.”

Lukies is convinced that every small company goes through the same five stages of the journey he is on with Monitise. It starts with a concept, then comes validation of the concept, commercialising the concept, growing the business, and finally making it sustainable or exiting.

For Lukies the expansion of Monitise is the realisation of a dream. He says that anyone who sets up a company exists on ‘a combination of fear of failure and confidence’.

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Comments (2)

Mobile Money

I am certain that the masses will start paying for products and services with their phones in the near future. Are they really willing to pay for a new handset in order to do this? Time will tell.

Personally, although they are not in direct competition with one and another and furthermore may even proove to be complimentary I beleive that Beem better satisfied the need as it is a service commanded purely by simple texts. Link: http://beemme.co.uk

Jamie

Jamie A Broadey , May 20, 2009

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Mobile Money.... ecosystems are critical to satisfying consumers needs for choice and regular useability

Firstly with regard to handset replacement I think that it is worth recognising that handset replacement is a significant existing (business revenue stream and) user behaviour - whether that be through phone upgrades, lost phones or simply consumers wanting to get the latest functionality (e.g. following new technologies like NFC, next generation 4G, LTE-based handsets...). Just as the iPhone and other smartphones have encouraged a new generation of handset replacement, new NFC ready phones will likely become the next de facto functionality.

Secondly models which do not support an ecosystem platform play approach to embracing banks, retailers, and others in the ecosystem, often struggle to get key stakeholders fundamental to their business model on board as they operate a "tribe" closed loop set up e.g. going head to head with the banks. Any digital money service - needs a network effect. Once lots of retailers are signed up it becomes more worthwhile for customers to adopt the system and that then encourages more retailers to sign up.

Where services like Monitise stand out is that they have proved successful in getting the banks, mobile operators, retailers and other stakeholders on board and part of the platform's ecosystem. All this is good news for customers...(and for Monitise!)

Karima Serageldin , May 20, 2009

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