Loving the folk on here who apparently know Monzo’s original business plan better than Tom Blomfield, whom I heard speak on the subject a couple of times at early Monzo events.
Tom was very specific. He envisaged a current account at the centre of a hub and spoke approach to finance, where customers were given access to others’ banking products, but Monzo not providing them itself. Hence why Monzo hasn’t just done savings and loans, like many here feel it should be. You can see vestiges of this approach in the savings pots, and open banking integrations with other accounts.
The current account meant getting a banking licence. Other providers wanted to do the same thing (think Emma and Yolt) but just using Open Banking.
Interesting how this seems to have ended up in an “all roads lead to Rome” kind of situation.
Monzo has now arguably arrived at something like this kind of original vision, but via an indirect route where it seemed (at least to us users, at times, with the focus on business accounts, etc) to be straying away from it until recently. And it is only fully realised if you subscribe to Monzo Plus or Premium.
Yolt, on the other hand, is becoming more like a bank as they now have an e-money spending card linked to their app - which is promoted as a way to help you visualise your discretionary spending and, in turn, help you save more. That is more than a little similar to Monzo’s initial pitch in customer appeal.
Revolut have also attempted to go after the financial hub model more recently after initially focusing on the foreign exchange element of their product, and now they are looking to become a bank too.
Dozens is doing something a little bit similar, but with more of a focus on the individual journey from (spendthrift) spender, to saver, to investor.
Starling and others are more traditional, either trying to be like traditional banks, but better and more digitally-focused (Starling) or focusing on niche markets and hoping to do well by using a digital experience as a selling point (Atom, Tandem, etc - with savings).
I claimed no such thing! Nor am I attemping to speak of Tom’s motivations.
It is legitimate, though to point out that the following two quotes are mutually incompatible:
I completely understand the nuance & difference between a “bricks & mortar” bank - a “bank” in the traditional sense, and what Monzo wanted to become. It’s also important to point out that you can’t have a banking license - and “be a bank” - without certain responsibilities and expectations that all banks have. Expectations both from the industry, and the customers!
I do think though, that this…idealism, for the want of a better word, that Monzo is something different to a normal bank, is also at the root of some of their failings.
As someone who has followed Monzo since early 2016, my feeling is that Monzo wanted a banking license because they had big ambitions and knew that being a “proper bank” was going to be important from a customer trust and regulatory confidence perspective. It also ensured positive press for Monzo, rather than dismissive “warning” articles about how your money wouldn’t be FSCS protected. So in that sense becoming a bank did work.
They then wanted to push the message that they were “a different kind of bank that lives on your phone”. This can be summed up in the idealism you referred to. But it seems that they were slightly naive as they did not realise the level of expectations that customers would then have of a “bank”. Chiefly, easy access to customer service through multiple channels and the ability to deal with cash and cheques for free.
It seemed, to put it frankly, that the reality of the market had shattered the bubble of the bank’s original vision. I’ve said before that the typical Monzonaut probably lives in London, lives a stereotypical “urban professional” lifestyle, rarely or never uses cash, and is financially comfortable enough that a “simple, small fee” of £1 or so for features seems like nothing to them. Ditto paying for Monzo Plus or Premium. This is not so for the majority of the population, or even the majority of Monzo’s customers.
Monzo’s leadership has realised this, I think, and is now starting to refocus on profitability but also continuing to grow the bank’s appeal and attempting to get back to the levels of customer growth we saw in the past. Hopefully this means the future is bright.
I just hope that history doesn’t repeat itself and Monzo misjudge a market again, as I believe that their US venture is doomed if they do not bring out full support for cheques over there. That could spell trouble for the entire company if it goes wrong, so I am sure they will be looking carefully at how best to position the product.
A perspective I share too! In fact as interested as I’ve always been in fintech, and Atom Bank aside, I didn’t jump into playing with these services until Monzo had actually launched the current account. That was the point where I felt comfortable signing up and trying them out.
If memory serves, I think I may have actually tried Starling first, but I lasted maybe 10 minutes after having my ID verified before I asked them to close my account. Their approach to security just irked me the wrong way, and Starling just felt off for me in general and not for me. I would want to give them a try again and a fair shot, I just hate the sign up process.
After a few ups and downs, here Monzo are now in 2021 as my main account (for now, anyway! Aside from Barclays, my financial affiliations are rather fleeting, and just as soon as Triodos get Apple Pay I’d like to give them a fair shot! Then there’s the very attractive idea of Revolut with a license!).
Obviously, since trying Monzo, I’ve been more open to dabbling with the non-bank fintechs, but really it’s the fully licensed bank account that’s needed for my trust and commitment.
Nor am I attemping to speak of Tom’s motivations.