Competitor update

I saw an email from Zopa today, they are applying for a banking Licence to become a bank

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That’ll probably mean Monzo’s potential for partnership is out of the window then. Otherwise it’d be a conflict of interest for Zopa.

Monese which had originally proposed a 50p charge per cash deposit when they had free banking is now charging 2.5% for cash deposits despite introducing a monthly fee

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Are Monese cash deposits exclusively through PayPoint outlets?

Yes, they are only thru PayPoint

Here’s the announcement from Zopa -

Launching a bank, to sit alongside our existing peer-to-peer business, should allow us to create new and innovative savings and borrowing products. At launch, Zopa will offer FSCS protected deposit accounts to savers and overdraft alternatives to borrowers.

The regulatory application process should take about 15-24 months

Although not a competitor, has anyone here tried Scalable Capital.

This is the card I would love to get… Theres nothing like this I know of in the UK…

I travel a lot… Probably 8 UK - SE Asia flights next year, my wife on a couple of returns… Plus a whole bunch of pan euro business travel basically constantly… The perks this card offers for travellers easily make up for its 450 usd annual cost. Even just the priority pass lounge card makes up for most of it, the airmiles, etc etc…

Absolutely…

The thing with ‘paying’ for a service like these cards is the represent an overall saving for the segment of people who pay for them…

I use priority pass cards (I get comped them but I think thats 450 GBP a year to buy).
I have travel insurance
I have specialist high value insurance to cover items which my base travel stuff wont touch.
I collect avios for airmiles… seat upgrades and flights…

If I can combo these into a cards services, even at significant fees… I am very happy to do so… Because over the year it ends up saving me.

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Yeah, I’ve just switched from Mondo to an Amex Platinum temporarily. The perks of airmile rewards credit cards are enormous.

Unfortunately I don’t think is something Mondo could ever offer, nor are they interested in offering it I don’t think. I think the best we can hope for is for the data from Amex/similar to be synced into the Mondo feed.

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agree its not likely to be Monzo’s market…

It’s something Tom’s thinking about -

https://community.monzo.com/t/what-about-credit-cards/5373/4?u=alexs

This seems like Monzo’s biggest challenge to me - the one that they will struggle the most to address because they can’t use interchange to support these rewards.

Amex charges merchants a higher (%) fee which enables them to give more back to consumers in rewards. “Packaged accounts” usually come with a monthly fee to provide additional services.

For the consumer they are either a very good thing, or a very bad thing; there’s usually no middle ground, as described by an analyst at MoneySavingExpert.com,

"Used well, these accounts can save you around £500 a year compared with buying all the insurances they provide separately.

“But, if you can’t or don’t use the benefits, then they’re a colossal waste of money. If you have, or get, a packaged account, always make sure it’ll save you, not cost you.”

Martin Lewis describes packaged bank accounts as the Marmite of banking!

“their nature means they’re a paradox. If you’re one of the millions who have, or had, a fee dripping from their account each month, check now if you’re being diddled. If you’re on a fee–free deal, check now whether you’d be better off paying.”

If Monzo ever decide to go down the packaged route, they will need to tread carefully. Packaged accounts are the subject of more complaints than any other financial product, bar payment protection insurance (PPI). One way to avoid this dissatisfaction would be help consumers carry out checks beforehand to confirm a net financial gain with a package.

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I’d be very surprised if Monzo do go down the packaged bank account route - seems to not fit that well with ‘marketplace banking’

Until the marketplace is available though I think it will be complicated communitcating the value proposition to customers though (e.g. ones who will think 'oh Monzo doesnt offer credit cards, loans, savings etc etc - but my ‘dinosaur bank’ does?? how is that better?)

Ultimately I believe Tom is correct - a credit card is a ‘solution’ to a customers problem (which could be very many different things as he says - debt consolidation(with0%transfers), rewards earning, spreading cost of big purchasing). Once you have a marketplace you can help a customer make the best decision for the product thats appropriate for their need (though need to be tread carefully with the dreaded ‘Advice’ with a capital A).

In that case, once there is a marketplace, if you want reward points, Monzo could help you choose the best one and then lets you see how you use it (once PSD2 in place) thats great! Until then, people who want rewards will probably continue to be skeptical of Monzo

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as you say Monzo cards won’t suit all the people, all of the time.

Good points, James. Marketplace banking products can still be packaged though, right?

I’d be interested to heard what sort of solution are you picturing there?

My assumption is that as soon as Monzo starts bundling products, they’re essentially recommending specific providers (which could lead to misaligned incentives), whereas I’d imagined Monzo remaining neutral & just establishing a truly open marketplace. But perhaps you weren’t thinking about bundling there?

Yep, the open model will probably start out as independent providers providing individual products (from which Monzo receive a commission). But as with any marketplace, as it matures I can picture value-added incentives emerging, for example a better deal when purchasing multiple products (a ‘package’ or bundle) which will benefit providers (and hence Monzo) and the consumer.

I guess the term packaged currently implies some sort of recommendation by the bank because there is only one option for each category eg. a Barclays account offering RAC cover, travel insurance arranged and administered by someone else etc. but in an open marketplace it will just mean discounted pricing from a bundle.

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Got it (I think) so essentially you’re talking about Monzo offering a discount for the purchase of solutions from several categories i.e. loans, credit cards + insurance?

I assume they would have to fund that from the referral fee that the providers pays Monzo.

Obviously it’s early days but that sounds good :slight_smile:

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Yeh, that’s essentially what a package provides when it’s working well. But not limited to these three categories, I’d like to receive at least the same benefits as the Barclays account if I was going to switch entirely. I expect Monzo will offer a lot more via the marketplace.

From the referral fee, the provider, or a combination of both. Fleshing out the commercial arrangements will be a job for the new Head of Partnerships. :wink:

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