Unfortunately, I suspect the investors hold all the cards at the moment. Monzo needs funding to be fully self-sufficient and ultimately profitable as it’s on a journey and hasn’t yet reached the destination.
Investors are likely to be facing funding requests on a number of their investments and will potentially be facing losses on other existing investments in their portfolios at the same time. It’s understandable they will demand changes to reduce costs and offer investment at reduced valuations.
Valuations more generally have plunged for banks, this is an industry problem rather than something unique to Monzo. I bought shares in Barclays around a month ago after they lost almost half their value following the onset of Corona. They’ve gained 57% since my investment a few weeks ago but the bank is still valued significantly less than it was pre Corona as investors know the lockdown will reduce their revenues and increase costs from bad debts.
The broader problem with companies having to make redundancies is that many of the best people will jump to other roles during the consultation period rather than risk redundancy and a period of unemployment.
Monzo are only operating the exact same way as majority of businesses at the moment. You can compare all you want to HSBC, Barclays etc etc. But unlike those banks, if Monzo lose money there’s no way the government would bail them out like the ‘legacy’ banks. Monzo have to be sensible here.
I’m not a supporter to see redundancies, but majority of us have or will face the same thing in our lifetimes.
Let’s say Monzo do fail and investors lose all their money, all staff lose their jobs and customers have to beg for their money from FSCS then everyone would be saying Monzo should of made redundancies when they had a chance. Monzo should of cut costs when they had a chance.
I disagree. Its more common sense. No matter how different you are you will always be mortal and not shielded against economical situations following natural disasters.
This seems pretty silly to me. It’s clear that monzo have done quite a lot to cut costs. For example @tom forgoing his salary for a year. Senior management taking big pay cuts etc. You name any other bank or major company that would do that?
When rbs got bailed out in 2008 and made huge redundancies did the top brass forgo their wages? Hell no they didn’t and they still got paid multi million pound bonuses.
Just take a step back for a minute and actually review the situation. Covid-19 is likely to cause the biggest recession the world has ever seen. In the first quarter we saw an economic down turn the equivalent of the entire 2008 crash (-2% gdp growth) and that only accounts for 1 week of lockdown.
We will most likely be looking at somewhere in the region of -15% which is unprecedented.
These are not normal times by ANY stretch of the imagination!
This is undoubtedly awful news for everyone involved but I doubt that these decisions were made lightly and as I say, this is unprecedented in terms of the economic impact.
Why do you think the government is rushing to ease lockdown and get people back to work? Because the country will quickly go bankrupt if we don’t.
I would also not be surprised if the bank you have switched to have to make a similar call which in effect would make your entire point pointless.
I would urge you to look at the bigger picture and appreciate just what is it we are dealing with here.
Yes you’re right sorry. I read that initially as more work less being done by devs. But in that scenario the dev workload would increase of course but less output per sprint as you say.
I agree that businesses will use COVID-19 as the reason why they’re not doing as good as they should be. Like Thomas Cook used BREXIT as a reason of their failing. Despite the Cheif Executives still taking millions from the company even when they were in negative.
I think Monzo have had a wake up call, some ‘legacy’ features which they refuse to work towards implementing are in fact major points that people look for with a bank. I believe over 55s are the biggest spenders. What features do Monzo have to capture their custom?
You want to pay money into the account? You have to pay £1 go to a Pay Point and hope the cashier knows how to work the machine.
You want to talk to someone? You have to get your smartphone out and chat. But along the way speak to around 5 different people before getting an answer.
You want to pay a cheque in? You have to mail it to Monzo. You can’t take it to post office or even use the app to do it.
I think you might get it now. Monzo need to be more accessible for everyone. I for one had a issue where I needed a 3rd party on my account to help me with my finances due to a mental health issue. I spoke to 15 different people. Got told numerous different things. And after about 2 weeks got the answer of we don’t have that in place. And we have no plans to implement that. So Monzo is not accessible for a big percentage of people. That is why Monzo could be struggling.
Yep you make some very good points here. I also think monzo was unlucky with the timing of the latest funding round. Had they been a few weeks earlier we probably wouldn’t be seeing redundancies and you can directly attribute that to covid-19. You only have to look at the dramatic impact on the stock markets to see how investors reacted.
Things happen. All the good sustainable companies have strategies in place for the unexpected. I’m not for one minute saying Monzo aren’t a good company or even they’re not sustainable. For all I know they could be making billions. I’m no accountant. My view is how I’m interpreting the situation by reading between the lines.
I just think that they put so much effort and time into the app like making ‘dark mode’ when there’s bigger issues to deal with first. I’ve seen the developers come on here and tease us with new features coming and not one of those is necessary. Monzo Plus. What a disaster. They probably put all the time and effort into the UI and backend without thinking about the features. If you got the Plus right first time can you imagine how much money will be rolling in? How can other startups manage to sort their premium accounts out but Monzo can’t? Surely the insurance companies will be crying out to do business with Monzo since Monzo market is the under 55s. The age bracket where phones get smashed during nights out. Holidays abroad. Insurance companies despite what you’d think would love the risk. The excess would easily cover any costs as well as the monthly fees. Why else would they be in the insurance game?
Instead Monzo launched the Plus that got you better interest. Now the people who care about that isn’t usually the age group Monzo are targeting. Stats don’t lie. The younger generation have less savings and spend more money on life.
I feel for the staff effected. I also have sympathy with all investors at the moment. No matter which way you look at redundancies it never paints a good picture in your head.
It’s not arrived yet. My point is how does the feature help capture more custom? Yes Monzo are trying to cater for their current customers. But if they want to grow then they should be trying to capture new customers. Can you imagine Monzo doing a TV advert to get more customers… “we have dark mode but we still don’t have any features that would make it easier for you to bank with us”.
More customers equals more money. More money equals less cut backs and less redundancies.
When I look for an account I look for how easy is it to use but at end of the day do I have a way to pay in to it with cash and is it easy to use to manage my money better and when I’m out paying for things I’m prob one of the people who wants better interest and cashback rewards from accounts but that’s not the only reason. If the account changes my life I will be taking it up I feel for monzo staff I would pay something every month to be with monzo cause I couldn’t Do without monzo cause there is nothing I can have is like it in the UK
Much of their strategy involves deepening relationships with their existing customers as that greatly increases the revenue per customer, or at least did before the number of transactions that I and others plunged during the crisis
Customers. Give them what they want. They want dark mode it seems. And I would use it if it did arrive
If anything they had already backed off actively acquiring new customers - witness the incentives being dropped - as the numbers kept coming anyway and they wanted to prioritise efforts on supporting what they already have
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Anarchist
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I disagree. Their customer service is already beyond F’d with the current amount of customers (so much that they have to make chat harder to find, reneging on their initial promise of 24/24 support). Opening the floodgates any more will just cost more to support them with no guarantee they’ll bring in more income to cover it. In fact one of the reasons they’re in this situation is because they already opened up the floodgates multiple times and burnt lots of money on marketing with totally predictable results: an overloaded customer service team, more disgruntled customers as a result of that (who will voice their displeasure loudly and tarnish the brand), and surprise surprise, still not enough revenue because “growth and engagement” does not pay the bills (unless you are an advertising company).
I think a more cautious approach, less focused on short-term “growth” (which only works as long as investors provide a near-infinite credit line) and more on per-customer profit. If this means progressing more slowly (and definitely not opening the floodgates with marketing, which beyond its initial cost also bears the risk of an overloaded CS and disgruntled customers tarnishing the brand which is very hard to recover from) then so be it.
When you start a business and you go to the FCA and investors to get your idea started. Do you not create solid business plans and growth plans? Or do you tell the investors you will only sit on 100 customers and you don’t want anymore cause you’ll make less money? For me you’d create a business plan for stages. Make sure the growth doesn’t come too soon.
To be clear, the accelerator was pushed on growth at a time when customer unit economics became positive, so more customers did in fact equal more revenue, and more attractive investment terms.
If you’re talking about a culture where development ideas aren’t tied to revenue, then there was a concerted effort to turn that around, about a year or 18 months ago. That’s why the focus turned to Plus (Where the execution failed, as opposed to the idea) and Business Banking. Should that have happened earlier? Probably, but hindsight is 20/20.