How much does Monzo differ from traditional banks in terms of going bankrupt

Hi Mozno community!

I have just started using my Monzo card and I find it truly amazing. It gives a really good vibe and I honestly cannot wait for all the new features like current accounts to be added.

Yesterday, I had a discussion with my friend who claims that if Monzo goes bankrupt it will not affect my money like it happens with traditional banks. If physical banks fail, your money vanishes with them.

How does it work with Mozno? Is it actually safer than traditional banks? Could someone explain me this? I would like to see whether me or my friend was right.

Thanks peeps :wink:


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Not sure where they got that from? Most banks are FSCS protected so if the bank fails, the government will bail you out to the tune of a maximum of £85k per institution.


This is simply not true. FSCS protection would cover up to £85k per person per institution. That applies to all banks in the UK (and Europe, really). I am not aware of any special protection that Monzo would offer over and beyond this.

Edit: This link actually explains FSCS protection a bit better than the above:


Yeah, that’s what I was thinking as well.

So Mozno doesn’t differ that much from traditional banks in that sense, does it?

It’s unique model doesn’t make it actually safer than other banks, right?



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Technically a higher level of cover than £85K may apply in certain circumstance, as detailed in another thread

Continuing the discussion from FSCS Protection – Ethics:

The Financial Services Compensation Scheme (FSCS) provides a £1 million protection limit for temporary high balances held with your bank if it fails.

‘Temporary high balances’ are the result of specified major life events that lead to a large amount of money being held in a person’s account for up to 6 months.


I don’t think so.

Incidentally: Searching for Monzo here shows that Monzo isn’t found. Anyone got any thoughts on that?

That database is out of date as Monzo, Starling, etc not yet included. However they are shown as covered by FCSC on the proper FCA PRA register of banks which is a more up to date and definitive database

Monzo might be said to differ from traditional banks in terms of likely it is to go bankrupt, even if the procedure for bankruptcy is the same.

For instance:

  • Monzo only currently lend your money out to other users in the form of overdrafts and loans to “spread the cost”. This is arguably a lot less risky than the high levels of exposure that traditional banks have to complex derivatives
  • Monzo have recently taken steps to ensure that their business model is profitable, such as capping costs from overseas ATMs
  • Monzo have found it very easy to raise decent sums of money for their expansion plans, with way more people wanting to invest than actual investment capacity


  • Monzo is still effectively a startup that is highly focused on expanding their customer base, rather than making a profit. This arguably makes them higher risk
  • Monzo isn’t a household name and doesn’t have that many current account holders. It likely wouldn’t be viewed by the government as “too big to fail” like other big banks and therefore Monzo themselves wouldn’t be likely to be bailed out
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Yeah, that makes sense.

thanks for the answer :wink:

Yes, I did check it, and saw it was in there. Surprises me that the main FSCS database would the that much out of date, given that Monzo and Starling had their license for many months now.

That might be true, but is a matter of personal assessment, I’d say. (Incidentally I think I agree with most of your assessment, but would still not trust Monzo with more than £85k if I had that much cash :smiley: - but then I’d probably either invest or diversify in that case anyway.)

The main point of FSCS protection from a consumer’s point of view is that it shouldn’t matter how much confidence you have in a given bank not to default (or to be considered “too bit to fail”). What matters is: Do you trust the government to be able to meets its obligations, but that would be the same, regardless of the bank.

There’s an argument to be made here that a smaller bank is better, as bailing out all Lloyds/Barclays/HSBC account holders if they were to fail would be much more expensive than bailing out Monzo’s. Still, in terms of financial risks, the FSCS failing to meet their objections would be waaaaaay down the bottom.

Maybe they’re thinking of the prepaid card? I think the money for that is held with a third party so if Monzo collapse the third party still has the cash.

As everybody else says, the current account has the same protection as any other current account.

Their business model, lack of many expenses like branches, etc that legacy banks have and lack of technical debt makes them less likely to go bankrupt, but in the unlikely case they do yes there’s no difference to a legacy bank, either way the government will have your back thanks to FSCS protection.

Are you using the pre-paid card or the current account?

I suspect your friend was referring to the pre-paid card - which was a temporary solution to test the product and users will be migrated over to the full CA within the next couple of months(ish).

Your friend may have meant/believed that as you loaded money onto a pre-paid card it was held separately from monzo, and so not affected by them, but by the pre-paid card scheme provider.

The monzo CA has full FSCS protection as detailed by others in this thread.

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