Helping Monzo become profitable!

Hi. I’m a big fan of Monzo and my wife and I are both small investors and use it for quite a lot of our day to day banking.

Our joint account has our largest pensions paid into it with about ten direct debits and four standing orders paying the regular monthly bills. We do wish that an overdraft facility was available on this joint account in case for any reason our pension was late or a direct debit suddenly increased unexpectedly but we live in hope!

In the meantime we both have overdrafts on our personal accounts where our individual smaller pensions are paid but while my wife uses Monzo direct with her shopping I tend to use mine to pay off my legacy bank cash back credit card as and when I buy something.

So the question is why doesn’t Monzo have their own credit card and start earning some money as I’m sure I’m not alone in this?

The joint account is key for us in terms of any Monzo plus subscription- we won’t ever do this individually but this then prevents Monzo every taking this revenue stream off us!

Lastly we do keep our fairly large savings in an interest baring pot which must mean we are Monzo supporters as Marcus had a better rate and transfers funds the same day…

Surely by focusing on the basics of banking money making then Monzo will soon become profitable?

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You’re not alone. I’ve wondered this myself, and can’t recall having seen a reason given.

I suppose it would be a considerable amount of work, and in order to get people to use it, they’d need to give better benefits than the incumbents currently offer.

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I’d be happy for it to be integrated and real time - the cashback is so small I’d happily give it up!

Our lending team are focusing on non-credit card lending and overdrafts. As you mentioned, there’s still work to be done there!

Credit cards are significant invisible work that we’re not quite ready to take on just yet, though anything can happen! If we were to do it, we’d want to do it the Monzo way on the Monzo platform though. :hot_coral_heart:

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I’m somewhat curious about this too.

The savings marketplace is working well from what I can see. But in comparison to Starling Monzo is behind on deposit levels.

The premium account has been put on hiatus indefinitely until a more compelling offer comes along. To be honest, unless something else comes round with a really compelling reason to sign up, I’m not that encouraged.

Overdrafts are currently in an unattractive place with fixed rate fees rather than a nice Apr that would encourage a bit more use.

Loans, dunno what’s happening there as my main bank will give me £15k pre approved at 3.4%, but Monzo still won’t give me one (despite the fact Monzo sees pretty much all of my cash deposits and spending money).

A credit card with some perks, if I’m honest would be miles better than a premium account IMO. Especially if its travel related, most customers have historically opened accounts with Monzo for that purpose. I already keep my monthly credit card spending in a pot on Monzo to earn interest on that before spending it.

If there were some packaged account services I could just buy up now through Monzo I would like Travel Insurance, gadget insurance, breakdown cover and so on.

Monzo could also offer services around medium to long term investing, very little on this so far.

Don’t get me wrong, its nice to be a part of this new enterprise and see it on its journey, but the investment money is only going to last for so long before it runs out.

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I’d rather monzo not offer a credit card on ethical concerns. (High intrest, used by people that should not use them)
Credit cards are fine if you pay them off in full. I just don’t have one out of choice. (and not liking owing people money even for 30 days)

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Any update on when we might expect to get overdrafts for Joint Accounts. This is not a “significant” amount of work as you already have the overdraft ‘infrastructure’ in place and the T&Cs can be easily updated from the existing Joint Account and single user Overdraft T&Cs

Just switch it on already!!!

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Is credit risk calculation for joint parties easy then? I’d be surprised. I’d always assumed that scheduling the amount of work required for that was the cause of the delay.

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:thinking: I wonder if Starling are still going to release their credit card next month? :eyes:

Edit: Nope, is the answer. Looks like next year.

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I don’t think Monzo should do this. Fees are the biggest killers of a portfolio and being a middle man with no added value will only serve to be a drag on performance.

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Well, you say that, but there are execution only providers that will negotiate discounts for their clients while taking a fee. Agree there is a very fine balance here to be found as you are totally correct, ongoing fees on investment portfolios are a big killer of long term returns.

Cavendish Online for example, they use Fidelity Internationals investment platform, but their clients are charged 0.25% (0.2% service fee + 0.05 ongoing fee to Cavendish) per annum where as direct Fidelity client pays 0.35%, 0.1% discount.!

Imagine Monzo being able to approach a similar platform and say they can offer easy access to over 3 million clients, that would be a huge incentive to provide a discount. Especially as the UKs largest platform comes in at just over 1 million customers. (Hargreaves Landsown)

Edit: as I have a few more points to flesh out.

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.22 flat to just go to Vanguard and by a globally diversified tracker.

Every .01% added on top of that and compounded will cost thousands in 30 years time, potentially the difference between a dignified retirement and not.

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Vanguard are really good with pricing. But worth remembering, their specialty is low cost trackers and they do it better than anyone else in the world. But that’s pretty much all they do.

Passivly managed funds are great, don’t get me wrong. Especially since the whole Woodford thing a big spotlight has been put onto higher cost actively managed funds. Warren Buffet even says just invest in trackers as over time they generally out perform active funds. But they can still perform well.

But what about people who may not want their money going into firms within those trackers? What about ethical funds? Small Cap funds? Emerging Markets? Maybe people want a choice.

My own investment portfolio (yes I’m bragging now) has an average fee of 0.9% per annum and my portfolio has outperformed the MSCI World Index tracker consistently for the last 5 years. So active funds do have their place in a diversified portfolio.

Monzo is trying to act as a market place for these services, not the ultimate provider. If they make my life easy to swap from type to another and encourage competition for these services to be provided they would certinatly have buyer power at their disposal.

Edit: who says vanguard wouldn’t happily just take a 0.01 discount on their OCF and offer the same trackers to Monzo customers for the same price with Monzo taking the difference? Fund providers do it all the time - have a look at Hargreves and the number of discounted share classes they have as an example.

Edit2: Monzo already do this with interest earning pots and pass on less % to us.

That’s really expensive. What do you hold?

That’s a relatively short period. I’d be intrigued to see performance during and after a market correction rather then one of the longest bull runs in history. Just buying the S&P 500 tracker would have done this fyi at 0.07% in charges and returned nearly 13% per annum (on average).

I can strech back to 10 years. :slightly_smiling_face:

I’m in 28 different funds ranging from expensive funds to a few smaller finds.

My largest holdings are Fidelity Funds Global Tech and LT UK Equity

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Interesting. Definitely has a higher beta then the benchmark you can see your upward/downward movements are definitely more severe.

More power to you.

Software features are never as simple as ‘just switch it on’.

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I think, in time Monzo will offer a credit card.

I think the race to become profitable is a balance between new customers using their banking app, and so needing better/new features to make sure that stays ahead of the curve and the competitors, and at some point in the future it will tip and credit cards will become a possibility.

I am not an investor so, whilst I understand Monzo is a business and needs to make money, I’ll be more selfish and focus on things that help me manage my own money better!

It’s nothing to do with the infrastructure or terms and conditions. We do not currently have lending scoring that makes decisions based on the credit files of two people for one loan/overdraft. It will likely come when that gets built. :slightly_smiling_face:

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Not really, The fact they don’t bullshizz me like my last bank did is enough for me to just use them whatever the offer is.

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