Starling Discussion & Feedback

[thom_horne (Thomas Horne)]

@glasgow

Indeed! Certainly helping give the industry a shake!

I see both Monzo and Starling slowly start to give the industry a good kicking into action.

I regularly compare FinTech’s effects on the banking technology to the effects that GMail had on revolutionising web based email.

Hotmail only offered 2mb of email space, had a terrible interface and generally was unloved and feature wise abandoned for many years; then GMail pops up on the scene. GMail was prettier, offered over 100x the space for free and had a revolutionary AJAX interface allowing drag-and-drop etc…

Within a year both Microsoft with Hotmail and Yahoo! with their Mail had to step up their game to keep customers waiting for a GMail invite. I still to this day use GMail and I personally think neither Hotmail or Yahoo! really ever did catch back up.

[PaulUK]

The only thing I prefer on my Starling account to my Monzo is the way they display Goals (Pots).

With Starling you can upload your own image and then this fits nicely across the screen with others below it and the current balance within the image. To Add/Withdraw, click the image.

Monzo have the Pot featured as a bank card with some pretty irrelevant images and the Add/Withdraw facilities underneath so, those like me with multiple Pots to make use of the IFTTT integration and updated Schedule Payment option have to keep scrolling. I know it’s only seconds, however, it is still slightly annoying.

That said, thinking of going FullMonzo in next couple of months from my legacy bank.

BTW, I am on Android Beta

[Trello]

I signed up for a Starling account. Why not? Grass might sometimes be greener elsewhere but you’ll never know if you don’t check.

I was offered an overdraft of £2500. It struck me from the start that it looked rather inexpensive compered to Monzo’s pricing.

I played with the slider in the Starling app for a bit and here is what I got:

Now, I have two words on that. It is time to change the way Monzo calculates their overdraft charges. In the name of simplicity, in my opinion, most users will be heavily overcharged. How many users will actually be overdrawn by £1300 to warrant 50p a day charge? My gut feeling is most will be overdrawn by £200, £300, maybe £500 max but will be charged multiple of what they should be paying.

@HughWells

If I remember correctly, the fee was modelled on a percentage interest rate (which was in the 1st generation Ts and Cs for the Current Account, before Overdrafts rolled out) but it was calculated this would be around 50p in most use cases anticipated so it was decided to simplify it and just have it as a flat fee.

After reading this, I am honestly surprised in most use cases, users would be overdrawn by around £1300 so 50p charge simplifies charges for them.

Monzo is doing good things on ethical and transparency issues. But their overdraft charges are just too high and need to be brought down to fair and honest levels.

[Demmedelusive (Graham)]

You’ll be interested in the fulsome discussions that have emerged here on the subject of overdraft. Go browse…

[j06 (Jamie)]

The thing is you’re looking at the cost of an overdraft in purely economic terms. CEO Tom firmly believes the majority of customers are emotional about their finances, not economical.

Take, for example, the evidence that most overdrafts in the UK are already more expensive than Starling, yet there isn’t a huge rush by consumers to get their overdraft charges down by switching. Nationwide charges the same 50p per day, and Starling’s own website shows most high street overdraft borrowing is charged at a higher rate even with additional charges.

Tom believes that the benefit from a fixed charge is that Monzo can, with certainty, tell folk exactly how much they will be charged if they are overdrawn for the rest of the month. It takes away the hidden cost of increased charges if an overdraft is increased, charges which cannot be predicted in advance. Tom is betting that people will respond better to a maximum fee of £15.50 per month, so they can completely take charges into account when budgeting. Tom believes the more expensive overdraft in this instance is worth paying for the confidence you won’t be charged any more.

It also means Monzo build in an ethical stance to borrowing: Because Monzo do not earn more in charges by lending you more, there is no financial incentive to keep lending, and it’s easier to work with customers to help them bring borrowing under control, using the complex and advanced budgeting features in the app, rather than just throwing more money at someone who is sinking. There may well be, as a result, less defaulting on borrowing and a higher proportion of lending at the bank is therefore profitable.

Finally, Monzo’s ultimate aim is to become the financial control centre of your life, not actually have ‘just’ a nice current account. In the brave new world of Open Banking it may well be possible to run your account through Monzo but buy an overdraft from Starling, via the Marketplace.

I used to be exactly the same, wondering why anyone would use a more expensive form of overdraft. You can find evidence of that on his very forum. Tom and Monzo have changed my opinion, quite simply.

Edit: You’ve used a ‘gut feeling’ to estimate the average level of borrowing. Elsewhere on this forum I gave evidence that the current average overdraft is in fact £1700, so it seems to me Monzo have pitched the tipping point where they become cheaper at just about the right level.

[anon23935806]

Well, he is the leader after all. Thankfully we are allowed to disagree (and do so) but ultimately it’s his business and it’s up to him to make the decisions that he believes would yield the most profit for the company.

I have no needs for overdrafts other than an exceptional 50-odd quid or so (for which I’m happy to pay because it would happen once a year and not worth the hassle of opening an account) but if I did need an overdraft regularly I’d definitely look at the competition like Starling.

[gallifreyangirl]

I just want an honest answer not flame war.

[Toblerone (Toby)]

@j06

Because Monzo do not earn more in charges by lending you more, there is no financial incentive to keep lending, and it’s easier to work with customers to help them bring borrowing under control

I think this is the key point, and the main argument for an overdraft structure at a fixed fee which we often (myself included) forget when debating the pricing.

I do consider Monzo’s overdraft expensive, but when I’m reminded of this, I do understand why it’s done in this way.

[anon40728597]

Well for me, I read that like once you’re over £1300 then you’re safe in the knowledge that it can’t get worse so you can borrow a bit more without fear.

Clever way to make money using overdrafts.

I applaud the simplicity from a customer point of view (they know where they stand) and business as a good money spinner.

[alexs (Alex Sherwood)]

@anon40728597

Well for me, I read that like once you’re over £1300 then you’re safe in the knowledge that it can’t get worse so you can borrow a bit more without fear.

Well Monzo’s not lending anyone more than £1,000 so…

Also, the fee is a flat fee of 50p per day so the good news is that Monzo’s got no incentive to lend users more than they should.

[nickh]

@alexs

Well Monzo’s not lending anyone more than £1,000 so…

Wouldn’t this mean they are always going to be on the expensive side (currently), if the “tipping point” is £1300?

For what it’s worth, as someone who doesn’t use an overdraft, I value the ease of understanding the cost of the Monzo overdraft, despite it being comparatively more expensive than competitors.

However, if you are living in your overdraft, Monzo is not the place to be - So perhaps the focus should be on living outside of it, rather than worrying about the fees.

If you happen to miscalculate, and enter your overdraft for a day or two, you’ll know exactly how much that mistake has cost.

I do sometimes feel that people think Monzo are going to be the greatest, cheapest, most transparent company to have ever graced our presence - And whilst they are excellent in some areas, in others (like overdrafts), they might not fit your specific criteria.

Monzo don’t claim to be “cheap” on their overdraft fees, and they have always encouraged customers to get a better understanding of their finances.

In my opinion, a better understanding would lead to less reliance on an overdraft in the first place, and this conversation would be irrelevant

[j06 (Jamie)]

Why don’t you just read what Tom believes for yourself?

[Rat_au_van (Em)]

Due to a child shoe crisis I’m going to go into my overdraft by about £2 when a direct debit comes out in an hour or so. It’ll be 1 day so 50p. I don’t need to look anything up in the app or do any calculations, it’s just 50p. I’m happy with that

[Trello]

Personality cult surrounding religious gurus, political leaders, spiritual mentors or, surprise, surprise… bank CEO, is something very unhealthy and dangerous.

The absence of critical thinking on this forum about some aspects of Monzo’s business doesn’t suprise me at all. It seems to be frequnted by crowdfunding investors, company insiders and devoted users with #Monzo4Life stickers on their MacBooks. Good for them. They are on the exciting ride at the moment. Sadly, some kids who joined the bank for the excitement surrounding Monzo on social media, might be taken for a ride, I am afraid.

Monzo is a bank and what bank has to do is to return profit to investors and shareholders. As it stands, Monzo is not even that good at doing it at present. What they are getting good at, is replicating all the practices they proclaimed to put an end to. Ridiculous overdraft charges ( if Monzo really doesn’t offer more than £1000 overdraft but charges daily fee equivalent to Starling’s £1300, it is milking their customers big time), two tier system for old and new users for card top ups while pretending that they don’t intend to create stratified version of their current account, 3% charges for Cash Machines’ withdrawals abroad over free limit which are higher than other fintech competition, and potentially other things I am not aware of. All of it, while losing money and rewarding their CEO with five-fold salary increase compared to the last year. If this isn’t replicating the worst excesses of the City, I don’t know what is.

After today, I am more aware of what Monzo’s practices are. I can see that their competion provide viable options to Monzo’s charges while at the same time acting more ethically than Monzo whitout screaming about it. It feels like we might be witnessing the birth of yet another bank here. It seemed great when it was launched, but the reality of operating within ruthless capitalist system is that you will be making money or be gone. The former always wins at the expense of the early days’ idealism. Some will wake up and smell the coffee, some will drink that bottle of Cool-Aid. Final words. All you guys need to take care of yourselves because no bank will ever care about you. You are just the product.

[Peter_R (Peter Roberts)]

@Rat_au_van

Due to a child shoe crisis I’m going to go into my overdraft by about £2 when a direct debit comes out in an hour or so. It’ll be 1 day so 50p. I don’t need to look anything up in the app or do any calculations, it’s just 50p. I’m happy with that

You’ll pay nothing because of the £20 buffer

[Rat_au_van (Em)]

£2 over the buffer, I don’t count the first £20 as overdraft as I don’t get charged