I did not have merging relationships with that bank
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I’ve seen similar news articles in the Daily Mail and Guardian. While I know Monzo have come out ahead of this and explained their position, the news papers haven’t been so kind.
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I’d imagine they will follow the same route as Savings accounts… first offer 3rd party ones, but also create their own
I understand where you’re coming from re: Investing, but you’ve also got to consider who Monzo’s target market is. They’re never going to build an investment platform that would satisfy the needs of sophisticated investors or traders… nor do I think they should go down this route. They need to build something relatively simple that suits the needs of the masses, which revolutionise the customer experience and encourages people to invest who may not have otherwise ever considered doing so. I’m getting the sense you’re disappointed with their investment product, but remember this is the very first release of the product they’ve made… they will continue to build it out, as they have with all their products.
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Would be great to see Monzo do something more interesting in insurance but agree we’re likely to see a better front end and then a couple of key partners at the backend for various lines of insurance.
As an aside, Lemonade is a dumpster fire of an insurance company and actually isn’t doing anything remotely innovative at the moment. They have some aspirations and some good marketing, but at the moment their insurance results (from a corporate level) are horrible!
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I don’t really have a view on the user experience piece - no doubt it’s great if they’re able to deliver a modern online quoting/paying/claims infrastructure.
From a fundamental business model basis though, I’m skeptical. They’re historically spent an inordinate amount of money on marketing and CAC. That is a problem in a highly competitive industry like insurance.
They’ve made lots of claims about being able to underwrite insurance using AI etc. etc. which just looks like absolute nonsense. When you looks at their results, their loss ratios (i.e. claims paid out relative to premiums paid in) are higher than the broader market. They have improved in the past few quarters but are still quite far from being ‘good’. What’s more, they’ve offloaded most of their ‘insurance risk’ by buying a lot of reinsurance coverage. Those decisions undermine their narrative. If they’re so good at underwriting with AI, then you should want to take as much underwriting risk as possible, not less.
On top of all this, the operations of an insurance company are unlike other fintechs. My personal view is that they won’t be able to scale like other fintechs. Yes, they can be more efficient than legacy players but there will always be a capacity on the number of customers one claims agent can support as it will always require a ‘human in the loop’ approach.
Headline growth of users can obscure fundamental issues in insurance for a time but it’s like papering up cracks - eventually real issues start hitting. You can see all these concerns when you look at their share price chart!! It might have hit a bottom for now and some of the above can, of course, change but I suspect long term the business challenges will remain for a while.
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My view is definitely a skeptical one and I appreciate there will always be more positive ways to look at it!
That said, I think insurance is much harder than most other fintech sub-sectors. Underwriting results are the proof of whether a particular approach is or is not sustainable so it will take more time to prove the model.
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Lemonade is not a company I’ve heard of before, but I’m familiar with insurance, it’s the industry I’ve worked in for the last 20 years.
I like idea behind them giving an excess money away and I can see why that will be popular with some people but I think their model could struggle if they move into buildings and contents or car insurance.
Car insurance is a race to the bottom in premiums due to aggregators like Go Compare etc and it’s hard to make any profit, you often depend on volume.
Once you get into buildings then you need vast sums to cover flooding/weather damage. Re-insurance can help but those schemes can be complicated and have tight claim processes. It’s easy to have a view serious weather events and wipe out huge amounts of money.
Maybe their approach will get around the cynical view that some hold that insurance is purely a rip off product.
I’m intrigued what sort of ‘interesting’ things you think they could be doing with insurance? I’m not hugely knowledgeable about insurance
I’m not entirely sure where best to drop this. This topic seems appropriate, but feel free to move this.
Just spotted this on Twitter*: https://x.com/t_blom/status/1724869506471018694?s=46&t=1K7c_wzsidBO0cgMbEQJaw
*yes i know, no.
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I was just saying the exact same thing yesterday
Perhaps have better trained, more knowledgeable support who read and answer the actual question, so that interactions take less time overall.
Following news of a likely Capital G investment, which puts monzo at a £4bn valuation, will they be offering crowd investors an exit opportunity via secondaries?
News story here:
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‘More than 4bn’ so i was hoping higher… maybe I’m being aspirational. It would be a great exit opportunity, especially as Crowdcube just acquired Semper, the secondary platform. Although I think I’d be tempted to hold for longer, or part-sell
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So a million new customers every 4 months?