📰 FT Article - Monzo: When is a bank not a bank?

Interesting article about Monzo in FT today -


(You can read the article free by registering on the FT website or Just Google the title and go via search result.)

Found these bits quite interesting;

Monzo’s deposits are held in overnight accounts at the Bank of England. In fact, as of its latest report, Monzo held £97m at the Bank of England, much more than the sum of its total deposits. This implies that a large portion of equity funding the company has received is currently sitting at the central bank.

…It is possible that people will end up frequently checking their daily transactions via an app, if not quite as obsessively as they check Facebook or Twitter. The more frequent the checks, the more effective the likely sales of commission-generating financial products.

… its conception of deposits as a grouping device is an interesting one, and provides one explanation for why it is expected to attract a valuation of up to $1.5bn at its next round of fundraising,…


Thanks for posting.

I found the comments more interesting than the article (we already know all about Monzo here!).

I find it fascinating to see what people outside of the bubble think about Monzo.

A lot of them still seem to be concerned about Monzo’s profitability.

I too want to bank with someone who isn’t going to disappear in a year or two (even though FSCS etc), but these people who cite Monzo’s lack of profits seem to demand a bank with huge profits or it’s not worth banking with. RBS made £10bn profit the year before we all bailed them out to prevent their bankruptcy - so that’s how much profitability is worth to an end user… 0.

It’s funny, I’ve never asked a friend if they want to grab an Uber and been told “nah, how are they going to be profitable - I’ll just wait for a black cab to flag down thanks”, and I’ve never seen people drop their basket in Aldi and tell everyone they’re going to Harrods because there’s no way these people are making a profit here.

Why are people conditioned to think their bank needs to be making large profits? :thinking:


I really enjoyed this article and also the way that the FT reported the annual report a couple of months ago - they. just. don’t. get. it. I just imagine fusty old ex-bankers writing these articles and roll my eyes. Startups burning through huge wodges of money is entirely normal, companies getting to a million users without any advertising is very unusual, companies getting customer satisfaction ratings like this is very unusual. I wonder when they will accept that Monzo, Revolut, Starling might be the future. This is why I get my fintech news from 11:FS (fintechinsidernews anyone?) - those guys know what they are talking about. I’m afraid that the FT may be out of it’s depth on these new fangled startups…


Here is the sequel they alluded to in the above article. Really interesting piece.


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If you get pay-wall just Google

The digital Chicago plan

A couple of interesting quotes;

Very few companies are doing what Monzo is doing. Why might other social network companies, which include some of the most powerful institutions on earth, gain a banking licence, take deposits from customers, and park them at the central bank?

A company like Monzo aims to do this to sell other people’s products, rather than its own, much like Facebook gathers consumers to sell them products. An app which allows customers to monitor their transaction history also creates data about consumer behaviour — the more people analyse their own transactions, the more data they generate.

The proposition for Monzo is whether the revenues garnered from the grouping effect, from commission or advertising, exceed the cost of intermediating access to the central bank. For larger social media businesses that make huge profits elsewhere, this may be unnecessary. The most important point is that there is already a strong historical connection between the role of deposits in society and what we now refer to as advertising.


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