Even though Atom Bank is a platform firm offering services to depositors and borrowers alike and uses deposits to fund loans, the main business of Atom Bank is dyadic because a depositor does not fund a specific loan and vice versa a loan is given without a linked deposit. Known as the UK’s first app-only bank, Atom provides different savings accounts and mortgages at a competitive rate, rather than simply current accounts (unlike many competitors). Also, the company has launched business loans available through a small panel of brokers.

Atom Bank works completely through an app, without sending any bank card. Customers can see how much money they have saved, how much money they will earn through interest, and how much and when they need to pay back their loan. Also, Atom offers to individuals and SMEs the possibility to customize the app, giving the option to alter the brand, theme, and the name of the personal account.

Atom Bank faces competition from both the traditional banks, such as Barclays and Natwest, and from challenger banks: N26, Monzo, Monese, Revolut, and Nubank. The competition is high with the growth in fintech partnership models such as Moneybox with Revolut and Monzo–which enables banks to launch products and acquire partners faster.

In 2019, Atom has finally started making money on its loans and it has registered revenues for £36.5m, while Monzo registered £15.8m and Monese £5.5m.

Atom Bank was founded in 2014 by Anthony Thomson (co-founder of Metro Bank), David McCarthy, and Mark Mullen. The company launched to the public in April 2016 as the first bank built exclusively for mobile. In January 2017, Atom added two new products to their Fixed Saver range, with three-year and five-year saving accounts available. In March 2018, Atom Bank announced they had joined Faster Payments Scheme as a direct participant and migrated all traffic across its retail deposit book to the real-time payment scheme. This enables their customers to send or receive money knowing that it will be instantaneous, safe, and simple.

Atom Bank is funded by 11 investors, with Banco Bilbao Vizcaya Argentaria (BBVA) and Toscafund Asset Management being the most recent investors. As per the 2018 Annual Report, Atom Bank has 310 employees, with 1.4Bn GBP deposited by its savings customers, and has loaned 1.2Bn GBP to small businesses and homeowners. In 2018, Atom Bank raised $514 million, reaching a valuation of $1.25 billion, becoming a unicorn company.

Atom Bank has two main customer groups: individuals and medium-sized enterprises (SMEs) with value for money and convenience. Initially, Atom was working on ‘invitation only’, during which registration codes were only made available to customers who had registered an interest in the new bank via its website. Today, Atom opened its doors to all the UK individuals and SMEs willing to deposit in a savings account (depositors) or asking for loans (borrowers).

Learn more about the Product Business Model

A dyadic transactional relationship where your good or service can be designed and delivered without prior interactions with the customer.

Engagement  — Value Creation Proposition
How Atom Bank creates value for individuals and SMEs:

Atom Bank engages with individuals and SMEs only digitally. Savings accounts are managed through the mobile app: Atom provides a display of savings and possible returns (how much depositors will get back at the end of the saving period). Loans and mortgages to individuals and SMEs are managed through intermediaries (brokers) who, not only engage with the underwriters at Atom Bank but also advise borrowers on the best deals available on the market. The company also creates value by offering competitive rates of AER, tax-free interest up to £1000, and personalized bank accounts.

Delivery — Value Chain
How Atom Bank works for individuals and SMEs:

Atom Bank works through its banking app: individuals and SMEs move money via bank transfer. Customers need to download the app to have access and apply for Atom’s products. The app is simple and user-friendly; its basic functions are Join Atom, Browse our products, Fixed Saver, and Your Mortgage. Interest rates are transparent and can be viewed on the app. Atom Bank joined with Bacs Payments Schemes limited to provide direct debit to its customers.

Monetisation — Value Capture
Atom Bank makes money through three main revenue streams:

  • Net interest income: customer deposits are used by Atom as loans for other customers;
  • Treasury income: extra deposits are held by the Bank of England and Atom earns a small amount in interest over time;
  • Fees and commissions: Atom also generates revenue by upselling their services and promoting a choice of brokers, earning a commission.

Disclaimer — Written by Ankita Banerjee and revised by Francesca Hueller under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. The information contained here should not be used for investment advice and is simply indicates the individual’s understanding of the company’s business models as of April 2020. © 2020 This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.