I hope not and I don’t think so. Our vision has always been to build a bank account for a billion people and attracting a wide range of people is a core part of that. For sure, over time, we’ll want to ensure that people can’t say “I’m not moving to Monzo because they don’t have basic feature x”, but I don’t think that’ll force us to radically change our approach. I think it’s much more likely other banking products will shift towards the Monzo approach 
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I think the industry average is about 5% of customers who have suffered from fraud (feel free to correct me if that’s wrong 
). Since our accounts are quite new, our customer cards have not been in circulation for as long as someone with a legacy account has, which means there’s been less opportunity for fraud to happen so far and we are currently tracking less than the 5% average rate. We also have an amazing financial crime and security team who work on fraud and are continuously building tools to mitigate these incidents for Monzo customers as much as possible so while we unfortunately probably can’t eliminate fraud, we aim to stay below the industry average
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Lots of questions! Here goes:
- Fair enough. Generally, we found a “financial hub” really appealed to a techy, early adopter group of people (like most of us here), but didn’t describe our long term ambitions. There’s this incredible emotional connection people have to their money and taking that stress away, making people feel in control of their money and ensuring they really are making it work for them is (to me) a much more ambitious and positive goal, long term. A core part of that is definitely building a financial hub — but it’s also much more than that, from the easy things like instant notifications to the bigger things like automatic energy provider switching. Does that make sense?
- Natwest are a business bank provider — we hold operating cash with them to pay invoices and staff etc. Not very interesting!
- If you’re thinking of the same press article I am, that particular piece had a very click-baity headline, that wasn’t backed up by the piece itself. In fact, the piece said “Monzo isn’t focusing on international expansion right now” or words to that effect — which is totally true. But it’s not moved to the backburner — it was never on the frontburner and so it’s still on the burner! Still totally part of our plan but we’ve always said and continue to say that we need to get the UK right first.
- Many! I truly believe we can build an ethical bank, that’s not a building society or a mutual. By doing crowdfunding, community (like this!), working out ethical policies and building it into our culture, I think we can have a long term, positive impact on society. There are some really interesting projects, like B-Corps, that do this perfectly and it’s something we’re very aware of.
- We’ve always said that the most likely exit is through an IPO in x years time. Nothing much has changed there
- Yes, totally — it’s a great point. The mission is a part of that — we’re also spending more time on understanding what our internal culture is and helping to train new joiners on that. It’s really easy when there’s 20 of you and you all have lunch together — it’s significantly more difficult at 300 employees and will be very difficult at 3000! It’s an ongoing battle, but I’m confident we can make it work
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Always I’ve answered this a bit earlier — but we’re always pushing to publish more and be more transparent. One of the best sources of suggestions is this forum, so please let me know if there’s more areas you’d like us to share!
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You’re right that the developer cost goes down, if we kept the same number of developers. Unfortunately, the realities of growing fast and developing new features mean that we also need more engineers — but you’re right that they don’t scale linearly with number of customers and so at some point in the medium term, we won’t be hiring anywhere near as quickly and that’ll definitely help
The £15/user figure is for every new user we bring on. So for example — we don’t need to hire new lawyers or new community managers just because a new customer has signed up — however we do need to hire more customer support staff. Obviously over time, if we double our userbase, other teams will need to grow to support that so costs will increase — but they don’t increase directly linearly with the number of customers.
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For the merchant spend, yep there is a thing called ‘Point of Sale Interchange’ that Mastercard and Visa offer, and is regulated in the EU. I think of it like a commission we get when customers use our card to make purchases, so all banks get this.
On the other things you’ve listed, we don’t make money on those, but we do incur costs whenever they happen
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Re. press: yes.
Re. Full Monzo, it generally comes down to: they top up through debit cards less, spend more on their cards and tend to use overdrafts more
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This is our Stripe relationship. We were lucky enough to have Stripe be one of our investors in the Series D raise back in Nov 2017. We’ve been using Stripe for the in-app debit card top-ups since back on the prepaid program, and so we disclose how much we’ve paid Stripe for the top-up processing services since they are now also an investor.
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They should give you a better rate 
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Yes that is something we look at as well. There can be additional regulatory and/or operational considerations to make depending on exactly what we hold so as we grow our deposit balances it will be something we look at more.
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A mix of both, but mostly on the efficiencies. We do want to continue leveraging technology to improve our product and services, and how efficiently we offer it. However we don’t want to reduce the quality of our service in any way, so there may be a limit to the cost savings that can be achieved and we are focusing on building our revenue streams for the future too
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The last few months have been focused heavily on the current account upgrade so we’ve looked a lot at the progress of customers moving over.
Other KPI’s we look at can be pretty conventional like profitability, fraud incidents, but we also focus heavily on customer metrics like the costs but also NPS feedback. Since we are a digital bank, we also report on systems performances which I’m glad to say has improved dramatically since migrating off the prepaid program and reducing our reliance on 3rd parties!
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We are currently applying for additional regulatory approvals before we can really proceed with the marketplace and expect to hear back from them fairly soon. This is required to allow us to have a marketplace where we’d essentially be an intermediary between our customers and a third party offering the financial products. Once we get this we can focus more heavily on the marketplace and what that looks like
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The £10 is dependant on the volume of our interactions with customers, so the more often customers contact us, the higher the number will be. But you are also right in that providing both our customers and customer services teams the right tools can help this cost go down too.
Customer longevity hasn’t necessarily impacted the cost. It’s driven more around how regularly a customer uses their Monzo card, for example the more transactions you put on the Monzo card, the more likely you may be to query something that has popped up. As more people go #fullmonzo we’re also working on getting the right tools in place so customers can get a lot of the answers they need through our AI help features without necessarily speaking to us, unless you want to of course!
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Of course! So we focus on variable revenue and variable costs, being the things are can go up or down directly due to our customer base. This includes:
expenses like providing customer services, costs of mastercard, etc.
These costs are then offset by some revenue we earn like overdraft revenue and interest on holding deposits
We then take the net amount and divide it by the number of users who have actively used their account in the last running 7 days
It doesn’t include fixed company costs like other staff besides customer services, or rent.
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Thanks both, interesting answers 
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EDIT: oops looks like you’re not yet finished 
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Hello! These are all terminologies we need to use per accounting rules, and they apply to all businesses, so I agree it’s not always super clear how it applies to any individual company - I hope this helps explain how these relate to Monzo specifically
from the ‘Statement of comprehensive income’ section of the annual report
Interest income: interest we earn so for example we place cash at the Bank of England who pay 0.5% on deposits
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Fee and commission income/expense: this covers some direct fees we earn or pay on customer activities like overdraft revenue, mastercard revenue and expenses on customer purchases
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Credit impairment charges - you’ve pretty much got it
for accounting rules, whenever we make loans to customers, we have to do a calculation that covers the risk that some customers may not pay us back. We take this as an expense upfront at the start of the loan. -
Other operating expenses: All the other stuff
examples include our technology platform costs, consultants, marketing. For this report it would also include our third party supplier costs on the prepaid program that we now no longer have.
from the ‘Notes to the financial statements’ section of the annual report
Table 6
- Fee income/expense on banking services: money earned or spent on specific traditional banking services, like the overdraft revenue or fees earned on foreign ATM withdrawals, and Mastercard expenses.
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We do incur a small cost for every payment you send out so if it’s all the same to you, batching up a weekly or monthly payment will help too!
Note to self, not to send a penny when adding someone’s details to check they’re right! Guessing that costs more than the transaction to send!
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