Competitor update

[anon44204028]

20th March. Since then crowdfunding shareholders have been trying to offload their shares on the secondary market Initially offering a 10 or 20 percent discount, today someone offered to sell their shares at a 50 percent discount

[DonPedro (Henry Pedro)]

@anon44204028

today someone offered to sell their shares at a 50 percent discount

damn… thats like watching a car crash in real time

[alexs (Alex Sherwood)]

Here’s what happened to Tandem - it’s definitely not great

Competitor update

There will be a charge for using Monzo’s overdrafts which is how they will make their revenue. I should have been clearer - AFAIK, that’s the only charge you’ll incur for using a Monzo account (with just one other exception) but you’ll only pay if you decide to use an overdraft, it’s essentially paying interest & there won’t be any punitive fees. I’ll leave Monzo to explain the semantics of interest vs overdraft fees, once they’ve finalised how the pricing will work. The lack of a bank branch…

[mikedefieslife (c-m)]

It was my understanding that most do it to cover off the difference in rates between the end of day on Friday and the start of play on Monday. I’ve had a fair few small refunds from Supercard due to this. Perhaps we could ask Monzo about it.

Fire is more comparable to CashPlus and CardOneBanking, than it is to Tide. Fire have a myriad of different fees and an application fee. I don’t know the situation in Ireland, but I think it will struggle against competitors in the UK.

Wasn’t aware of Monese, it has a £5 per month cover charge. I don’t know what the company’s user base is, but it hasn’t enjoyed the publicity of Monzo, and the others.

Definitely interesting times ahead. Look forward to seeing it all play out.

[alexs (Alex Sherwood)]

Just a quick tip, if you search this topic for the names of any of these competitors, a lot more info’s been shared about them already, for example -

also Tide deal with business banking & Passion Capital (one of the investors backing Monzo) are invested in them so they’re definitely not going to be a Monzo (or Revolut) competitor. It’s a very different type of business, although they have a reasonably similar approach to utilising technology.

[mikedefieslife (c-m)]

My post in reply to the article on the future of Fintech. It was moved here after talk of competitors.

[alexs (Alex Sherwood)]

This made it sound like you might be comparing Tide with Revolut -

@mikedefieslife

I wonder how sustainable that is considering the costs they face in opening and maintaining the accounts. Revolut has over 500,000 users, and has made over 21m transactions.

so I just thought I’d mention that

You made some good points / asked great questions in your first post which I’ll pick up on later, when I have time

[alexs (Alex Sherwood)]

@mikedefieslife

Take Atom for example. BBVA is a major investor with a 29%. So presumably a full take over, or an IPO will be their exit strategy.

I expect you’re right about that.

@mikedefieslife

I wonder how sustainable that is considering the costs they face in opening and maintaining the accounts.

I think it’s too soon to say whether their approach is going to work, they only launched 8 months ago! But this is another example of a FinTech bank without bank branches (which make up 40% of the legacy bank’s costs) which should help.

@mikedefieslife

Revolut, they were founded two years ago, and have hit half a million users, which is impressive.

It is. It’s worth bearing in mind that they offered cash incentives to encourage users to sign up though, whereas Monzo haven’t & are at over 150k users now.

@mikedefieslife

They have since tightened up on how the card can be used fee free

In addition to the markup at weekends, there’s also a fair useage policy which limits the amount of ATM withdrawals you can make & FX conversions. The new premium product increases the former limit & removes the latter so there must be some customers who pay fees when they go over those thresholds, at the moment.

@mikedefieslife

recently introduced a premium membership which should bring in additional income

It should, although it didn’t sell out that fast, especially considering that it enabled users to invest in the next crowdfunding round.

@mikedefieslife

I wonder if a banking licence is something they might pursue in the future?

The CEO has suggested that they won’t, although that article suggests they’ve keeping their options open.

At the moment, that looks like one of the key differences between them & Monzo / Starling - the latter can earn income on optional overdrafts whereas it looks like Revolut will be reliant on perhaps not so optional, fees. Although it looks like Revolut have some other revenue generating products on the way.

@mikedefieslife

If so is the market large enough for Monzo, Atom, Starling, Revolut, and Tandem?

There are 65 million current accounts in the UK at the moment & none of the challengers have even a million users so it’s the legacy banks that’re really the competition here.

@mikedefieslife

the larger banks will start to fight back at some stage (though this might a while given they are locked into antiquated systems).

Simon makes a pretty compelling case for the reasons why they won’t be able to fight back here or at least, not quickly enough.

Atom’s business model is so similar to the legacy bank’s (just without the branches) that we can probably safely ignore them. It doesn’t look like Tandem will have a banking license anytime soon so you can bundle them together with Monese & Revolut.

I believe that technology will be deciding factor here:

• The prepaid card providers are reliant on 3rd parties like Wirecard & GPS and we’ve seen how that limit’s a company’s ability to innovate & avoid outages. Monzo will be able to do some very interesting things once they’re their own issuer, processor & are working with their own ledger etc.

• When I asked Tom, he said that leveraging data & identity will be much more important than the overdrafts long term. I assume that being a bank helps with the identity piece.

• Monzo’s adoption of a microservices architecture should enable them to innovate at a much faster pace than the competiton.

• The biggest tech companies are all trying to become platforms. The most obvious example is Slack which creates a central hub for users to work in, then enables easy access to data / tools from other providers. Monzo is trying to do the same thing & that’s what should enable it to reach much larger scale (& revenue) than a financial services provider.

So when you combine those factors, it looks like Monzo & Starling are best placed to capture the largest portion of market share & I doubt that all of the challengers will survive. It’s too soon to say who will end up winning that battle but I’m sure you can guess who I’m betting on

[alexs (Alex Sherwood)]

Now that Monzo have the full banking license, I thought I’d point out some of the differences between Monzo’s license & Starling’s (the most similar challenger bank to Monzo).

Unfortunately I’m not sure what the implications of these permissions are & I’d be interested to know, as I expect they’re linked to Monzo’s business model. This might be one that @paul could explain?

Accepting deposits:

• Eligible Counterparty

• Professional

Dealing in investments as principal:

Customer Type:

• Eligible Counterparty
• Professional

---

Exercising/having right to exercise lender’s rights and duties under a regulated credit agreement (excluding high-cost short-term credit, bill of sale agreement, and home collected credit agreement)

Monzo also have several waivers / discretions listed And it’s good to see that they can provide debt counselling!

[anon44204028]

Waivers/discretions are the opposite of limitations and are a positive thing

[rarther]

Be prepared for a creepy twilight zone!!

Revolut Community

Seems a lot more complainy on that side of the fence.

[Bruce (B)]

Haha it’s confusing to switch between the two

[DaveTMG]

I’m a member of both communities and I find the revolut one to be a bit depressing. I was going to invest in revolut but decided against it based on the amount of problems I see reported.

Revolut’s support seems very patchy, with long waits and poor responses to customers. Combined with the downgrade in features, it made me doubt their long term survival.

[mgrundig (Marcelo Grundig)]

Starling Bank developer portal goes live

[alexs (Alex Sherwood)]

As the first UK licenced bank to launch a public API in keeping with the ambitions of PSD2 and the Open Banking initiative, the APIs enable external developers to create products and services that work together with Starling’s banking app.

*sigh*

[mozzauk (Andy)]

Getting bored of Starling now, they seems to care more about journalists and developers than people who would actually use them and test functionality, and all they seem to post is how great they are etc…

Let people use it, and they will tell you how good it is… ala Monzo

[DonPedro (Henry Pedro)]

mad late to the game… yawn

[Bruce (B)]

Facebook coming at cha

Facebook brings group payments to Messenger

[matteogamba (Matteo)]

we had Tom in the TransferWise office last year (that’s when I got my card )

I was actually surprised to see Starling Bank to close a partnership with TW before Monzo :-/

[rarther]

I wonder who will ship it first / at all?