Monitise is pushing aggressively into new markets to build its profile, but mobile financial services' impact on traditional technology development is threatening the company's relevance.
European media outlets, including the Daily Mail, are reporting Monitise is exploring strategic options (which usually means the company is seeking a buyer) following an earnings slump. The company recently drew new investors, including MasterCard and Santander, as Visa backed away from its relationship with Monitise.
Monitise did not return a request for comment by deadline.
The London-based company, which provides payments technology to about 350 financial institutions, warned that its full-year revenue will far short of expectations, forecasting EBITDA losses as high as $76 million, worse than the London financial market's estimates.
One of Monitise's challenges is the growing access to application programming interfaces (APIs), which allow banks to use open development tools to build mobile payment interfaces or e-commerce applications faster and at less expense. That technology decreases the reliance on vendors such as Monitise, which had early momentum in mobile financial services by connecting mobile technology into systems that are hard to integrate, such as ATMs.
Monitise was "early in a space where there weren't a lot of options and provided a quick back door for systems that were very hard to integrate to," said Roy Vella, a mobile consultant who has advised companies such as Intuit and Visa Europe. Vella was also an RBS Group executive in 2008 leading the bank's initial foray into mobile. The bank used Monitise's technology to power its solution. "Back then there were no real external APIs into core banking systems," Vella said.
"The ATM switch (via Vocalink) was a great back door that increased speed to market for mobile banking, but the ATM was a transitional element," Vella said. "Relying on the switch as a key means of extracting data from your accounts was never going to be a long-term solution."
Banks have traditionally been reluctant to use open development to upgrade their core systems, but that has been gradually changing. Banks are now building their own solutions in-house or using other vendors, including a significant amount of startups developing in the financial technology space and offering services with more functionality at a lower price point.
But that strategy isn't working, according to Vella. Monitise, which was a buyout from Morse and Monolink, "mostly hires from banks and large IT vendors. As such, it doesn't have the same startup mentality that is necessary to evolve quickly and stay relevant," said Vella. "They're just not a bunch of startup guys used to moving fast and innovating ... [Monitise] is mostly just a bunch of ex-bankers."