What do they include in customer operations? Is that all their running costs?
Is this annual or monthly?
A bit worrying that overdraft is their biggest earner. Especially as the way they charge is about to be banned so in all likelihood this will dramatically decrease unless they set a very high interest rate.
I’m quite surprised they earn that monthly from overdrafts, that would mean that half of customers are always overdrawn.
They chose the current pricing structure because it made it easier for users to manage their overdrafts so if anything, I expect their revenue from overdrafts to increase after they introduce their new pricing. Even though that won’t be the intention.
Have you done the maths on that? I think best case £1000 overdrawn 50p a day works out over 18%
£100 overdrawn 50p a day works out 182.5%
How would they be able to charge more on a flat percentage?
These are the costs for a single customer per year. So, on average, each Monzo customer spends 14 days in their overdraft (less than 4% of the year).
(the image is from this part of this Monzo Open Office: http://www.youtube.com/watch?v=XyDVoPcsxx0&t=7m10s)
The average person borrows £700 when they use an overdraft so the 182.5% figure is not realistic
It’s the cost of providing customer support (see 9:52 in this video) & it’s monthly annual.
Also, what @awjdean said
Edit - to correct my mistake after awjdean pointed it out.
26% then
So it’s an annual breakdown not a month?
I guess we’ll have to wait & see what fee structure they come up with!
To get to the annual totals, you’d need to multiply those monthly figures by 12.
From rewatching the video, I’m pretty sure these are the annual totals.
NB: as far as I can tell, they don’t actually say if all the figures are annual, they only say the overdraft one is annual. However, it wouldn’t make any sense to add up some annual figures and some monthly figures, so it’s safe to assume all those figures are annual figures.
It’s an annual breakdown.
Why does it say October?
It must be monthly otherwise some of those figures are drastically too low.
Ah ok thanks, either way, the main thing is that the net figure is positive
Edit - yes you’re right, they say the customer operations cost is annual too.
Sounds like they’ve extrapolated using the costs for October.
In other words, they’ve taken the figures for October (and maybe a few months before that) and used those to calculate what the figures would be if the average cost of running the account and the average income from each account remains the same for an entire year.
If so, that’s fair enough, but still will be difficult to charge more than 26% on overdrafts
This is so off topic now but if people aren’t as clear on how much it costs they’ll be more likely to pay more as they’ll lose track of the charges. Unless it’s made super clear in app.
Surely it will be transparent
It was a long off thread topic attempt at explaining something so I asked the coral crew to separate it into its own topic so it decluttered the other one - sorry if thats upset you
Yes it will but unfortunately that doesn’t mean that it will be as easy to manage as the current fee structure. A lot of people find fixed fees easier to interpret than percentages. So Monzo initially went with fixed fees because of user feedback.