Integrating Freetrade and Monzo

There’s been talk over on the Stocks & Shares Pot thread about seeing stocks and shares portfolios in Monzo.

Freetrade was mentioned, and (disclaimer: as an investor in both companies) I’ve been thinking about how an integration with Freetrade might work.

Here’s the pitch: :newspaper_roll:

  • Monzo + Freetrade = highly complementary
  • Monzo can unlock 1m+ additional users for Freetrade - when Freetrade is ready for them. FT can then monetise a large part of this market when they launch chargeable ISAs and Alpha (their monthly subscription product).
  • Freetrade can help Monzo in demonstrating a tight integration between the apps, and make the financial hub concept come to life. This data and demonstration will be valuable in attracting additional partners.
  • But Freetrade + Monzo can be more than the sum of their parts. What if they offered a set of pre-selected investment products that they user didn’t have to actively manage - a bit like Nutmeg - bought in a couple of taps from within Monzo? This doesn’t dilute the Freetrade proposition and a small mark-up and revenue share means that this might be a lucrative revenue stream for both companies.
  • Freetrade could do with better banking services - and live cash transfer from external bank accounts. Monzo could provide back-end banking services to Freetrade - for example by giving each Alpha customer a sort code and account number - making the lag of sending money to Freetrade a thing of the past, generating revenue for Monzo and making Freetrade slicker.

What would it look like in the Monzo app? :monzo:

  • New ‘investment’ section in the new Account tab
  • From there, existing Freetrade customers see their Portfolio as an aggregated view. Tap to breakdown - still within Monzo - then when selecting individual stocks it takes you seamlessly to the right screen in Freetrade.
  • New customers get the ability to open a Freetrade account. Immediately with no hassle. App downloads in the background - Monzo shares KYC with Freetrade (with the user’s consent, of course) and you’re already logged in and good to go.
  • As a separate proposition within the Monzo app, users can tap to open a set of pre-prepared funds. Available exclusively within Monzo so not to dilute the Freetrade share-dealing proposition, charging a small commission would generate revenue for both companies.

How would they make money? :euro:

  • No cost to either party of showing existing Freetrade customer data within Monzo - this part of the integration just helps both companies grow
  • Assuming Freetrade sees value in growing its freemium customer base, Freetrade pays Monzo a referral fee for each account opened from within Monzo (£5, say).
  • Similarly Freetrade customers opening a Monzo account would net Freetrade £5 (same incentive as for the other Monzo account opening trials).
  • For the pre-selected investment products, Monzo and Freetrade each take a mark-up of 0.25 - 1%
  • Monzo charges a monthly fee to provision bank account services to Freetrade alpha customers (call it £1/month)

(Note: all these figures are guesses and based on no real research)

This would lead to an ongoing, mutually beneficial commercial relationship, I think / hope.

What does everyone think? Is this an interesting model for folks like Monzo and Freetrade to look at?

(@alexs make this happen, please)

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Sounds like a good idea. I have asked freetrade in the past, any plans to work together with monzo or integrating their app with monzo. So far, they mentioned its not on their pipeline yet. It would be really brilliant if they can integrate

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There are lots of interesting ideas here, which in the long term I agree would be great for these two companies to explore. I think any first integration needs to be a lot simpler though:

  • S&S ISA Savings pot on Monzo - invest in world stocks with very low fees (VWRL)

Each partner could add a small percentage fee (I’d go with 10 basis points each) so fees are unobtrusive - I think for this different product a percentage fee makes sense as it doesn’t penalise small deposits. I’d make min deposit £100 or something really low, with no top limit - this could potentially make monzo a lot of money and give them a really compelling advantage compared to other banks.

Messaging would have to be right of course, based around long term saving, telling people it is possible for their fund to go down as well as up in the short term.

So this is vastly simplify saving using the stock market, with probably 5 x the returns of the Cash ISAs - I honestly feel most people don’t appreciate how bad the returns on cash are at present, if you’re saving for the long term you are losing money with almost any Cash ISA.

Then later a great thing for freetrade would be your other suggestion of:

  • Instant withdrawals from Freetrade to Monzo

Any more complex integrations would have to wait till they at least have the above in place, they are certainly possible but better to start with the easiest and most useful features and get them done. Fingers crossed the two companies do decide to work together.

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I just came on here to make the same suggestion, although you articulated it much better than I could!

As a user of both Monzo and Freetrade I think they are both made for each other and I would love some integrations. Even if it was just as simple as seeing my current freetrade balance in my monzo app, in much the same way I can see my Barclaycard balance.

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Sounds like a great idea. Revolut has also announced stock buying features in-app

I’ve just read this article about Freetrade that has an interesting nugget:

It’s also looking at an ‘auto-pilot’ feature which would automatically funnel money into different accounts for you and integrate with customers’ banks so they can see their investments in their banking app. “We want people to go to the Freetrade app, but if you’re looking at your savings app it would be nice to see how much you’ve invested,” says Fuller.

Emphasis mine. I’m assuming they’re working on an open API, but who knows?

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Great idea!!!

This would be amazing, great idea @Peter_G!

I love Freetrade and would love to see a similar offering through Monzo whether by way of a JV arrangement with Freetrade or building out it’s own platform like Revolut. I think this is a missed opportunity as Monzo already has 4+m users vs Freetrade’s 150k. I believe Feetrade also licences use of its platform. Would love to hear more from Monzo on this. This would be a great product to tie in with the premium account.

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The freetrade forum is buzzing with rumours about Monzo acquiring freetrade??

“Investments” have been lurking in the :monzo: app code since v4.39.0 (possibly before), but it’s not known what form the feature will be - Investment pots? Connected Investment accounts? Integrated with Investment apps? Full-on integrated Investment ‘exchange’?

Exciting…

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This is where I’d place my bet.

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Can’t see anyone buying Freetrade at the valuation they got recently, so depends on the haircut investors want to take

Will take a look. But I worry that I might have inadvertently started that rumour:

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Way up the top of this topic were my thoughts on how Monzo and Freetrade could work well together. If (and a massive if) Monzo has used Freetrade as the white label engine for its investment platform then they’ll have a big strategic driver for an acquisition. But then again, Freetrade losses are still high and will need to be driven down pretty quickly…

But still, if Freetrade ends up in a fire sale, it might be too good an opportunity to pass up.

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It was the article in the Telegraph and it has grown arms and legs

The Telegraph said that Monzo was interested in acquiring Freetrade? Got the quote?

(I might be looking at the wrong one, but no mention in the Telegraph article posted above).

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