Atom boss Mark Mullen: ‘People shouldn’t be loyal to banks’

Leading the pack in getting a banking licence — which he did in June 2015 — does not appear to have worked out to Mullen’s advantage. Monzo and Starling have both achieved “unicorn status” — being valued at more than $1 billion (£760 million) — while Atom Bank has scraped in at £435 million.

Atom does not disclose its number of customers while Monzo has 5 milllion and Starling 2.8 million.

While his rivals have launched current accounts — regarded as the staple product of any bank — Mullen decided not to. He has, instead, stuck to residential mortgages, business loans and savings products, where Atom tops — or nearly tops — the best-buy tables.

But then Mullen, who spent his entire career at HSBC until leaving to start Atom in 2014, is something of a maverick. He is perhaps best known for being the only bank boss in Britain to put his staff — 470 in total — on a four-day week, cutting their hours from 40 a week to 34½ without a drop in pay.

In his featureless office on a business park in Durham, Mullen admits his working week is slightly different to that of his colleagues, who — on the whole — either have Mondays or Fridays off. On Fridays, he stays at home — 63 miles away in Yorkshire — but still grafts. “I feel more relaxed about the work I do on Fridays,” he says, but “regulators don’t abide to a four-day week and investors don’t abide to a four- day week.”

Among the reasons he decided to cut down staff days was to help stem an exodus of workers. As England came out of lockdown last year, Atom was losing some 26 per cent of staff to resignation — up from a more usual 9 to 16 per cent.

The bank employs people who think digitally, skills that were in demand after the widespread move of businesses and consumers online during Covid, and Atom suffered as London-based businesses could hire people still based in the north of England with big pay offers.

“[I had] to do something rather than just pay people more to keep them … because that’s a sticking plaster,” he says.

On Tuesday, he will meet 340 of his staff to discuss what comes next with their working lives. “I’m trying to make sure that whatever we do by way of hybrid working, we bring people with us,” he says. Might this mean that Durham, where the council backed Atom from the outset and even has a stake, will no longer be its base?

Mullen says he does not yet know the answer and a number of options are on the table. “The most extreme version is that we look to sell the lease and move to a completely flexible working/homeworking basis,” he says.

He is also trying to figure out how staff and customers will cope with the inflationary shock coming from the war in Ukraine. “We are running an affordability stress test on the [lending] book, just to get a heads-up on what might happen, particularly with energy prices,” he says.

However, where Mullen does have answers is about the way in which the big four treat their customers. “The problem with banking is that you shouldn’t be loyal to your bank. They don’t deserve it; it’s your money. Your job should be to pay as little to your bank as you possibly can and earn as much from your bank as you possibly can. It doesn’t pay to be loyal,” he says.

Banks, he explains, use all sorts of tricks to make it difficult for customers to figure out how much interest they are getting for their savings, and to gauge the true cost of borrowing. Fees are wrapped up in clever catches and tricks.

Take current accounts, which customers are reluctant to move to rivals. While they purport to be free, he says banks make no money from them and there are still hidden costs. A Competition & Markets Authority investigation in 2016 found that they particularly penalised those with unarranged overdrafts. Mullen argued banks do not pay interest on current account deposits either.

“It’s one of the great loss-leader propositions in the industry that banks insist current accounts are free if in credit,” Mullen says.

Only when competitor banks start to charge fees that are transparent will he be prepared to launch a current account. “The dirty little secret in UK banking is how they make their money,” he adds.

His answer comes from the red-hot mortgage market, where Atom has lent £3 billion since launch. The big four, plus Santander and Nationwide, made £16 billion in profit (excluding provisions) last year. Mullen says that was the amount they could have made entirely from mortgage lending.

It was a chance encounter at a birthday party with Anthony Thomson — the brains behind Metro Bank, which in 2010 became the first branch-based bank to launch in the UK in 100 years — that led to the launch of Atom. One idea, Mullen said, was for a regional version of Metro, but he wanted it to be more mobile.

Mullen had spent more than 25 years at HSBC, running First Direct for three years until 2014, when he quit in frustration at lacking the resources to expand what, in its day, was a revolutionary phone-only bank.

“I thought I could do better than First Direct,” he says. “I could do the things I couldn’t get done there.” Thomson served as chairman of Atom until 2018.

Atom’s current chairwoman, the economist Bridget Rosewell, describes Mullen as “energising and exhausting” — and willing to change direction when needed.

The most obvious change was a U-turn in 2017 when he ditched his earlier plan to launch current accounts. The decision sparked a huge internal debate and required his investors to be persuaded.

Until 2019, 90 per cent of the bank was owned by Spanish high street lender BBVA, the Toscafund investment vehicle and controversial fund manager Neil Woodford’s Patient Capital Trust.

When Woodford’s fund imploded, it was painful not just for his investors, but also for Atom. “Suddenly one leg of your stool falls off,” says Mullen. It was also a tricky time for other investors in Atom. The gap was closed by investors such as Tosca, BBVA, Schroders and Moulton stepping in.

He insists he is not concerned about the valuation of Atom lagging Starling and Monzo. “We don’t do what they do,” he says, arguing that they too have changed direction. Starling, he reckons, had not been involved in lending until the government launched its emergency Covid bounce back loans for small businesses during the pandemic. He decided not to get involved because of the uncertainty about the lending criteria.

“We didn’t want to be accused of taking advantage of a crisis in that way,” he explains. But he did lend through the larger scheme for bigger companies, the coronavirus business interruption loan scheme (CBILS), which had clear lending criteria attached.

Valuation will matter when it comes to the question of when Atom will float. Mullen puts a positive spin on the price: “My position is, particularly in the context of a listing, that I prefer to start low.”

He has talked about a float in 2022, but admits that 2023 is more realistic. “This year is not desirable ... markets are practically closed right now. I don’t think we’d be unusual in saying that 2022 is not looking like a vintage year for transactions,” Mullen says. Also, there are other factors. Atom has just started to turn a profit on a quarterly basis in the third quarter — and has continued to do so — while Covid continues to present uncertainty.

So, there is much to do. He wants to launch savings products. There are plans for mortgage customers to get their home loans approved in one minute — currently available to fewer customers than he would like. He is even planning ways to store carbon to become more than a carbon neutral bank— one of many of his radical ideas.

But Mullen is clear in his main goal. “I think like customers, my job is to build a business that gives the customer the best possible value I can. And if I do that, then I’ll create value for my investors.

“Our objective is to create a truly digital banking machine, where the fewer the number of people we employ, the less you’re going to have to pay,” he says. And it certainly does not need branches.

Mullen’s car is a Range Rover and his favourite film is Inception. He likes to holiday in his native Ireland

The life of Mark Mullen

Vital Statistics

Born: February 6, 1968
Status: married with three adult children
School: Newbridge College, County Kildare, Ireland
University: Trinity College Dublin (history) and later Warwick Business School
First job: greenkeeper at Royal Curragh golf club in County Kildare
Pay: £435,000 plus potential bonus of same amount in shares
Home: North Yorkshire
Car: black Range Rover
Favourite book: the Palliser Novels by Anthony Trollope
Drink: coffee
Film: Inception — “It’s rare you find something that is truly original”
Music: Neil Young
Gadget: iPad
Watch: Rolex, a Submariner. “It’s certified as waterproof to 300 metres. In the history of humanity, only two people have ever been near 300 metres”
Charity: Cancer Research UK and the RSPB (the Royal Society for the Protection of Birds)
Last holiday: Dublin and Donegal

Working day

The chief executive of Atom Bank gets up at about 6:30am, has a “simple breakfast” and drives the 63 miles to work. It takes an hour to reach the office on the outskirts of Durham. Mark Mullen works until 7pm and heads home. After dinner, he spends about 45 minutes on his rower or exercise bike before watching sport on TV.

Downtime

Mullen, 54, plays the guitar — “like Neil Young, grossly imprecise” — and walks his Airedale terrier, Boo.