Hi all! I have a big question I’d love your feedback on: how do you think Monzo should get paid when people sign up to marketplace products?
For example, if we notice you might be able to save money by switching energy providers and suggest an alternative supplier, if you do decide to switch, that supplier will pay us.
Here are a few thoughts on our side:
- The simplest model is for the partner to pay us a flat commission for each new customer who signs up. For example, they could pay us £50 and we might choose to split this with the customer who signs up: we get £25, and they get £25. The issue with this approach is that it might incentivise us to switch a customer every year, even if it isn’t in their best interests
- A model I prefer is a lifetime revenue share model, whereby the partner pays us a fixed amount or percentage of revenue / profits for each year that the customer stays with them. This aligns Monzo better with both the customer and our energy partner as we benefit when we pair customers with the energy supplier that best meets their needs and gives them the best value. (That’s assuming we get paid the same amount by each partner of course!)
- In general, a useful philosophy might be to ensure we are paid a fair and finite fraction of the value a customer gets by switching. For example, if we save a customer £250 / year on energy costs, making £25 / year seems fair, but making £250 / year doesn’t!
At Monzo we’re trying to build a better bank, and a big part of that is coming up with a business model that aligns us as closely as possible with our customers. Traditional banks make most of their money by lending, so are incentivised to have hidden fees and high charges.
Instead, we’re trying to build a marketplace model where we make money when we help our customers save money or make more of their money by connecting them to the best products and services on the market.
We need to make money in order to have a sustainable business, so coming up with the best way to make money is important. I’d love your feedback as we figure this out. Thanks!