When a former rugby hooker and a self-proclaimed ‘nutty professor’ got together for a glass of wine and a chat about mobile banking, it may have seemed unlikely that the resulting technology would later be dubbed ‘The new darling of the City’ by The Times.
But when Alastair Lukies, met Vodafone’s ex ‘chief architect’, Steve Atkinson, through his work on Westminster news service ePolitix, something clicked. The idea for Monitise, which allows its users to check their bank balance and make payments via their mobile phone, was conceived a few nights later.
“It was just one of those zeitgeist moments,” says Alastair. “One night I was lying in bed, and I thought, hang on. If (ATM giant) Link already have a piece of technology that connects up all the banks, why can’t we connect that with mobile operators?”
The pair’s backgrounds complemented each other perfectly: While techie Steve predicted the emergence of a mobile market based on more than just voice and text, Alastair used his ePolitix contacts – high-powered people in a range of sectors, from technology to communications to banking – to gauge reactions from the various markets.
For Monitise, the first obstacle came when they started to approach Plcs to take on their idea. Their first target was Link, who gave them a mixed reception. “They said, ‘we love the idea, but Al, you look about twelve, and Steve, you look like a nutty professor’. They ended up turning us down.”
The rebuttal lead the pair to re-think their strategy, and eventually to consider corporate venturing. “We talked to a lot of technology companies about incubating our idea. We eventually settled on (blue chip technology company) Morse, because we got on very well with their chief executive.”
The move gave Monitise the instant credibility they had been looking for. “All of a sudden, two guys with a good idea and a business plan were perceived as senior people in a £300m company with a balance sheet and all the things banks look for to be comfortable that what you’re doing is appropriate.”
The pair’s next step was to give the business even more credibility by recruiting an impressive board. “We focused very hard on getting experts from the varying industries we were trying to build relationships with: people from mobile backgrounds, people from banking, people from security.”
As a result, the company’s board reads like a ‘Who’s Who’ of the banking and mobile industries. Alastair recruited David Dey, who once sat on the board of BT, Carphone Warehouse CEO Andrew Harrison, ex-Visa president Christopher Rodrigues, and, until he joined the cabinet, Digby Jones. “We have a board that most FTSE 500 companies would be jealous of,” Alastair grins.
In April 2007, Morse announced the de-merger of the two companies, and Monitise’s subsequent listing on AIM. The move risked de-stabilising already fragile connections, but through a clever deal engineered by the two companies which meant a share in Monitise was issued for every share in Morse, the floatation raised an additional £21.4m in capital. “It’s quite a clever transaction,” said Alastair in February 2008. “I think only about a dozen of them have been done before.”
Although Monitise has now signed up RBS, Natwest, HSBC, Alliance & Leicester, and First Direct in the UK, as well as a joint venture with ATM company Metavante in the US, Alastair says the business is only at an early stage of its start-up cycle. “In five years, we’ll be two-thirds of the way through the journey,” he says.
Clearly, though, Lukies’ main concern now lies with his shareholders. “It’s all down to profitability,” says Alistair, somewhat philosophically. “Otherwise my shareholders would kill me.”