No doubt, and they'd be silly not to. I like Mondo, but i'm not sure there's a crying need for Mondo... I just think London needs it's own bank.
However, the housing market in London is all over the place, and there isn't a bank that has a direct interest in helping people on to the housing ladder in London. I think if you had a London centric bank that understood the housing situation and it's customers needs well, you'd capture a great sample of the capital.