How easily can the big banks replicate the Monzo experience

(Jolin) #1

I started replying to @Pipefish where his post appears, but realised my response is way off-topic for that thread, so here’s a new one…

The big question being, whether that is something that can be done with the 1970s back-end. I suspect (a rough guess as a complete outsider), that the big/old banks can probably get 85%-90% of the Monzo experience with a well-designed app. But I imagine the last 10%-15% will be impossible if they don’t completely rebuild their backend infrastructure. And this is before you consider the features Monzo will be able to build in the future due to the flexibility of the infrastructure they’re building, and the marketplace which will be key to a whole new way of managing your finances.

All this is also to say nothing of the internal tools Monzo has developed to allow the level of personalised 24/7 customer support we’ve come to expect

As I say, I think the big banks probably can get mostly there by throwing money at the problem. But fully closing the gap is a much larger problem for them, and without doing so, the appeal of Monzo (and others) will be a force to contend with.

Could the big banks copy what Monzo's doing?

The main issue for the legacy banks is that maintaining their prehistoric system is going to cost them more and more as the people who can work on those systems retire and nobody is there to replace them (I sure as hell don’t want to be learning COBOL).

So not only do they have to throw money at the problem of replicating the Monzo experience, they also have to pay the “maintenance tax” and that will get more and more expensive as time goes on.

Not to mention the cost of disaster recovery in their systems is probably much higher than the equivalent in Monzo’s case (note that Monzo systems are distributed so an event that would cause a disaster in a legacy system might be completely benign in a modern system).

(Alex Sherwood) #3

This post might be of interest, for anyone who’d like to know more about the significance of Monzo’s utilisation of technology compared to the legacy bank’s (but it is a separate topic :slight_smile:) -


I do know of projects to replicate the old banking stack on modern infrastructure, so the legacy banks are definitely taking notice.

Also, there are challenger banks on the mainland which are actually startups owned by the legacy banks.

(Alex Sherwood) #5

It’d be great if you could mention some examples from both of those lists :pray:


I can’t mention any of the former because it’s not public information…

The latter - look at for instance, owned by ABN Amro

(Patrick) #7

Surely as long as they can get real time data out of their current system, they can just plonk a Monzo like interface on top? - Which it seems, that’s exactly what B is?

They’re getting transactions in and out and list of commitments, why can’t they replicate Monzo? Just the Monzo like system sits on top and skims off the data. I read an article recently where Yorkshire/Clydesdale where talking about ‘plugins’ - APIs for B.

I’d be very concerned if Monzo was bought by a big bank, I’d probably leave. For years I’ve only banked with Co-op and Nationwide. With Yorkshire Bank as an exception as they are a small bank and had a cool looking product.
Part of my attraction to Monzo it that it isn’t a big corporation.


Same - in addition to the tech stack being nice, another good part of Monzo is that it’s a human-sized company and not some corporate behemoth.

(Simon B) #9

With regards to selling out to a big bank, you know that old phrase, “If you can’t beat 'em, join 'em?”

Well… what if you can beat them? :wink:

(Patrick) #10

This is what I like - I don’t mind how big Monzo gets. But the reason I’ve been with Co-op/Nationwide for so long is because of their ethics.

I don’t care if they make billions, as long as they stay as a bank - deposits, withdrawals, maybe mortgages and credit cards at some point (although I know that’s not in their plans for now).

But as soon as they turn into a ‘bank’ or get bought by a bank and start getting into investments and funding dodgy stuff (oil, weapons, tobacco, whatever) - then I’ll be gone. I’d be gutted, I so hope that doesn’t happen.


You mean ethics of charging enormous fees for a returned direct debit or non-GBP payment? :sweat_smile:

(Patrick) #12

More the other stuff they’re in to - crashing economies, investing in weapons and oil. Stuff like that.

Barclays supported apartheid South Africa for instance.

I liked the idea of TSB being an independent bank that was UK only and just a retail bank. I opened an account. A few months later they got bought by Sabadell, a huge Spanish banking corporation. I closed my account. It’d be so nice if Monzo just stayed Monzo. A plain retail bank, but awesome.

(Jolin) #13

This is what I would do if I were RBS (or Barclays, Lloyds, etc.). I wouldn’t try to create something like :monzo: with my existing systems. I’d setup a small team with a clear vision and strong leadership, give them operational independence, and let them build away.[1] It wouldn’t result in something that would serve most of RBS’s existing customers initially. But over time, it would be suited to more and more of them, and you could start promoting it to those most likely to want to use this new bank. Maybe eventually the ‘old’ bank stops doing current accounts entirely, but their products can be accessed from the ‘new’ bank. I don’t know. But I do know, that if I were running one of the big banks, I’d prefer that my subsidiary was taking away my customers, instead of a different company.

Not that I personally want this to happen! I wouldn’t use a big bank-owned subsidiary, I agree with others that Monzo’s small and personal approach, and their careful consideration of ethics and how they treat their employees and customers is important to me. I’m just surprised that none of the big banks have tried to set up a ‘challenger’.

[1] Note that this happened in the telecoms sector when O2 set up giff gaff.

(Andrew L) #14

If it were me, I would try and forget about technology and think about what I can do for my end customers and what my value proposition is to them. Only once I really understood the “why”, would I start trying to answer the “how”. I actually believe that banks can do a lot more with their current technology in terms of value proposition and differentiation - techology =! innovation.

Although saying that - there was an article on HBR yesterday saying that retail banks need to take a much more long term view to their investment decisions

(Jamie 🏳️‍🌈) #15

Use first direct as a case study. When it was set up by one of the Big Four it was revolutionary. 24/7 phone banking, and its customers raved (and still do) about it. But its tech is absolutely ancient. Its internet banking and app are both horrendous. Yes, it has operators who answer the phone straight away and know what to call you after you’re voice verified, but the crux is it STILL THINKS like a big bank. You can’t see loan overpayments in the app, you still have to have a credit card paper statement every month for god’s sake! Pending contactless payments don’t show up for three days. The point I’m making is you can dress an old bank up in the latest ‘thing’ but if an old bank is paying for it, you’ll still get old bank ideas. I made this point on another thread, Monzo feels like a tech company with a banking licence, not a bank with a tech team.

(Alex Sherwood) #16

Following on from that, I’ll just share an indirect quote from Jason Bates, one of Monzo’s co-founders

Banks have digitised analogue products not created digital services. Most have done it through learning as little as they have to about the technologies and processes that would accelerate and achieve greater levels of success.

the follow up comment from David Brear, who’s one of his colleagues at the consultancy that he now works for, was

To quote Jurassic Park (as i like to often!) - bankers were so preoccupied with whether or not they could that they didn’t stop to think if they should.

(Patrick) #17

Sorry to keep going on about B, but it’s where my main accounts are so it’s my main reference point when comparing with old banks.

Literally the only thing B doesn’t have that Monzo does (from an end user point of view), is push notifications, maps and company logos for transactions. Contactless transactions show up instantly and everything.

I think people are underestimating them. As soon as they realise there’s a real threat they’ll be in there.

(Alex Sherwood) #18

The thing is, the features that Monzo’s building at the moment are the basics. Look at apps for almost any other industry & Monzo’s simply meeting that standard. So if it wasn’t for the fact that the legacy banks have set the bar so low, we probably wouldn’t be that impressed by what Monzo’s done so far - they’ve simply built the new basic functionality, that every user, of every bank should expect.

It gets interesting once you start considering APIs & platform that’s been built with a modern architecture. The former enables 3rd parties to provide products, services & functionality so that Monzo doesn’t have to & the latter enables Monzo to build new features much faster than a legacy bank.

We haven’t seen the full potential of the platform yet because it takes so much work to build an entire banking platform from scratch but once it’s there, watch what happens :rocket:

(Simon B) #19

We’re definitely more like a tech company with a banking license than like a traditional bank! For a start, you won’t see that many suits in our office :wink:

Although I’ve never worked at a tech company or startup before I started working here, I have close friends who work at Google, Twitter etc, and we’re much closer to them in terms of company culture than any bank I can think of!

(Dan) #20

Some of the most intelligent individuals I know work for incumbent retail banks. It is wrong to characterise them as luddites, they are merely dealing with very different – and typically very challenging problems. Rounds of mergers and acquisitions activity, a changing operating environment, huge back books – they all bring significant complexity. Because of which they struggle to manage change but perhaps more critically, obsolesce. These are huge beasts.

I know of incumbent banks which have built core banking stacks based modern architectural principles: cloud native, service-oriented open architecture etc. Just as a POC – they can afford to throw money at these projects. There are even a number of fairly fintechs selling seriously impressive, to borrow an awful turn of phrase, ‘bank in a box’ solutions. You are probably likely to see is a range of ‘challenger brands’ emerging from the existing players.

So does Monzo have a sustainable competitive advantage based on it’s technology stack? Probably not, someone will replicate it. Even the adoption of a platform business model isn’t particularly unique at the moment - every pitch deck in Shoreditch is creating a quasi-financial services supermarket (although I do think Monzo are perhaps best place to execute on it)

However, Monzo has achieved something almost unheard of in financial services – a brand that has genuine extrinsic value to the user. It is cool to pull out that hot coral card. It’s one of the reasons I find it hard to get excited about Starling – and don’t get me wrong, the app is good. But it feels so stuffy in comparison. There is genuine humanity in everything about Monzo. And you do not get that in the big banks. You can’t fake it. You can’t buy it.