I donāt get the whole, āIām happy to accept less interest for the convenience of seeing everything in one appā argument.
With Open Banking, many banks are introducing features whereby you can see other accounts from other providers in the one app. There are services from the likes of Yolt and Emma that let you see all of your balances across all of your accounts. The Starling Marketplace shows the balance of your PensionBee pension, Wealthify investments, Habito mortgage, etc. (with more providers to come). I thought that Monzo also had some cool ideas with respect to a Marketplace (yet to materialise).
No-one else is charging for the convenience of seeing everything in one app. This does come across as āmoney-grabbingā, even if that wasnāt the intention.
Now, all of that said, I understand thereās a lower entry point (Ā£500 vs Ā£1,000), so for that reason itās fair to say itās a slightly different product and so is the rate. Fine, although I would think some people will just go direct for the higher interest once they have the requisite Ā£1,000.
I suppose itās just a bit disappointing seeing what has clearly become a trend at Monzo - instead of partnering up with providers to offer competitive products to customers via a Marketplace, it looks like the plan is to strike deals with companies then offer co-branded products in-app, creaming off some profit at cost to the customer.
Iām wondering this too. For someone like me who only has a couple of thousand in savings in the Investec pot (and no likelihood of hitting the ISA limit any time soon), is there any benefit at all to keeping the Investec pot?
Thatās what I did. 1% vs 1.14% is not a big difference but better than a poke in the eye. You also donāt pay tax on interest earned on an isa and Iām unlikely to be able to save more than 20k a year. So for me, it was a no brainier. If you can save above 20k, then I would have both.
The lifetime isa is the only one I think it worth it
And seeing as a lot of Monzo customers are younger looking into offering a LISA would be a good idea
In the same way as every other bank and business in the land makes its profits, you mean?
Sorry, I must be missing something fundamental here because thatās the way business works isnāt it? In banking, the bank always keeps some of the interest on the money that handle. Itās how they make some of their profits.
Exactly, Monzo is a bank, itās not a mutual, or a co operative, and there is a need to return a profit sooner rather then later.
As for the rate, other financial orgs can bump their rates through other products, if youāve got a mortgage book with I suspect a decent number paying a SVR on their mortgages, you can give a little to bump ISAs up, or cashback on DDs etc etc.
Iāve suggested elsewhere that itās as much as anything, the result of the success mobile banking, and in particular, Monzo, has had in promoting the one-stop shop. That, and a fear of the unknown?
Either way, the ease with which one can sign up to a savings product, even with traditional banks, is being lost somewhere.
there is definitely an argument for convenience and a slightly lower rate, I think however this rate is quite a bit lower and beyond that level - certainly for me anyway.
I just opened a Coventry Building Society flexible ISA at 1.5%, completed the online application, got a letter in the post to check the application and sign, drive to the post office to post it back, then 4 more letters to confirm its open, my telephone banking code, my internet banking code and a key facts document. I go online to register for internet banking using the details sent, but actually you can only go so far and then have to wait for another letter to come out that has more login details.
I would happily sacrifice 0.1 to 0.2% for a far slicker experience.
Everybody consumes differently. For some (as is evident on this forum) donāt want their money in different places, no matter how easy Open Banking and APIs have made āseeingā it all in one place.
I have family members who wonāt put things in different places due to the āhassleā involved - even if the benefits of doing so far outweigh any hassle.
Who are we (or Monzo) to say that just because people consume that way that they shouldnāt. Sure its not the best rate around - but to Monzoās credit it is a completely different, quite unique offering as against OakNorthās current direct ISAs.
Lets be perfectly honest, if youāre the type where you are banking that Ā£20,000 ISA allowance every year - youāre no doubt going to have a better ISA wrapper (and not a cash one at that). But for those who want to save a little, in the comfort they can see that as a pot as against their current account balance - 1.14% isnāt all that bad.
This is also the first of a few offerings Monzo have in the pipeline. Whilst I for one wonāt be opening a pot - I can really see what Monzo are trying to achieve at this stage.
See, I straight up wouldnāt bother with that. So itās either Monzoās rate or nothing for me and Iād assume quite a lot of others that are new to the world of savings.
I can see my PensionBee balance in Starling and they donāt take a percentage. I can see my Wealthify balance in Starling and they donāt take a percentage.
My point is that just being able to see everything in one place isnāt a good enough reason IMHO to offer lower rates than you can get by just going direct.
Of course Monzo has to make a profit and, as I said, the fact that there is a lower minimum requirement of Ā£500 does make this a slightly different product, so for that reason you could justify the lower interest rate. And thatās OK. But accepting a lower rate in return for the convenience of seeing your balances in one app isnāt something that people should think they have to do.
so why stick with Starling ( insert any other named bank ) when there are better offers on for instance cash back or switching bonuses, better overdraft fees etc etc ?
You would be occupying most of your days continually switching for an extra Ā£1 interest
I donāt disagree with you but (apparently) the reality is that there are (many?) people out there who wonāt use a savings product unless itās shoved in front of their nose.
Whether these people bank with Monzo is a different matter of course . Theyāre certainly not on this forum if they do.
Until recently, all of my/our money sat in various flavours of First Direct savings account. Initially, this was because of mortgage offset but once we moved house (and mortgage), it took a long time to start moving things around. Interest was low across the board, of course, but that wasnāt really the reason, there was just too much else going on in life.
For me, I would prefer Monzo to offer āsomethingā to those who wouldnāt bother saving otherwise but I donāt expect them to do it for free.
While Iād love market leading everything for my use, this is a small bank and thatās just not a realistic expectation in my opinion.
Edit: I do think the āforum bubbleā we inhabit breeds false expectations of the possible (which is also writ-large across some of the more independent financial discussion communities) and this sometimes comes across as ābashing everything that isnāt good enoughā. For me, reality and pragmatism needs to intrude somewhere along the line.
But this isnāt seeing your Oaknorth Pot in Monzo - it is a completely new product that Monzo and Oaknorth are bringing to Monzo - sure you can go direct but you canāt get the Monzo pot if you do and you canāt see it in the App if you did.
But that is your consumer opinion, youād much rather go out and find the best deal whether that means everything synergises or not. But for others, they donāt want that they want it all in one place. Monzo arenāt chastising you for your decision, or for those who want it in App. Theyāre not unfairly ripping people off for the convenience, at least I donāt think they are anyway.
I can see the argument - and agree you shouldnāt be prejudiced for the sake of convenience - but I donāt think that is what Monzo is trying to do here.
Iām not saying that Monzo has to be market-leading in every respect with every product. With Starling, Iām happy with the bank account and I have the added bonus of being able to see the balances of my pension and savings. For this, Starling donāt take a cut. Thatās my point.
Actually, no - Iād rather be able to see everything in one place. Iām just saying that people shouldnāt have to accept a lower interest rate in return for that ability. You donāt with other providers.
But I think this is the core difference, it is a completely separate product (yes it has some interest scraped off) but it isnāt just āseeingā the ISA in Monzo.
If say for instance, Monzo customers were charged to be able to see their Barclaycard in Monzo - that would be wholly wrong (they arenāt doing that but its just an easy example). But Monzo have gone out, done the negotiating and provided a product that I would say, for some will be very useful.
The customer is still free to go out and go to Oaknorth direct, to Marcus and Nationwide should they want better rates, Monzo arenāt making anyone take them up.
At the moment, every customer of every savings account that isnāt Marcus āaccepts a lower interest rateā for the ability to bank with someone other than Marcus.
This is exactly the same. The only difference is that we know what the bank is making on our money here which we donāt everywhere else.
I would argue that no-one is āacceptingā a lower rate from Monzo since a higher rate isnāt on offer from Monzo. Or, if you prefer, Iām also āaccepting a lower rateā from First Direct because they also donāt offer Oaknorth rates. (My FD ISA is empty.)
. Theyāre certainly not on this forum if they do.