After a short week off, we’re back with yet another chance to ask a Monzonaut how Monzo actually works as well as the other weird and wonderful questions we like to ask
This week we’ve got the excellent @ConnorPB visiting the Community to discuss his role as Product Manager for Borrowing Growth. As always, I’ve asked our guest for a little description on what they do and how they got here which Connor’s kindly provided here
Hey I’m Connor
I’ve been at Monzo just over a year and I’m currently a Product Manager working on the growth of our borrowing products, mainly loans and overdrafts.
My squad are responsible for raising awareness of our loans and overdrafts products through marketing and contextual prompts in the app. We also build new features to make our borrowing products more competitive and easier to use.
Before Monzo, I’ve worked in product as a bunch of other lenders (Barclays, Motonovo) and some cool startups (Sonovate, Deazy).
I’m here to answer (almost) any questions you have about the growth of our borrowing products, with the help of some folks from my squad
Let’s give Connor a warm welcome and ask him which he’d rather fight 10,000 ants or a 20 foot worm?
How do you toe the line of “raising awareness” vs “encouraging debt” for customers? Are there specific laws/rules on what you can say/do?
Do you think someone has ever had twins, lets call them Bill & Bob, and then at some point during their early lives, because lets face it, all babies look the same, the parents started thinking Bill was Bob and Bob was Bill and then they spend the rest of their lives being the other sibling?
How much of the overall lending decision comes down to credit rating/info from third parties and how much from internal account use by the customer within Monzo?
Really great question, looking forward to the answer to this one.
Having worked at startups and other lenders, do you see Monzo as more of a corporate or more of a startup?
I see that you say you work on mostly loans and overdrafts. How well integrated are all the borrowing products (so those and Flex), and do they use the same or similar decisioning models etc?
What sort of KPIs do you follow internally to show that “Borrowing Growth” is working - how do you show you’re meeting business perfomance goals in this area basically?
Thanks for the flattering intro @AlanDoe
I’ve done some research and a typical ant colony can house up to 100,00 ants, apparently. So 10,000 doesn’t seem too scary. I’ll take the ants.
On the worm…is it a worm of normal girth that is 20ft long, or is it in proportion?
We talk about being on the right side of the raise awareness vs encourage debt line quite a lot.
Our primary aim is to take a bigger slice of the unsecured borrowing market that already exists in the UK - not to increase the size of the market. There’s about £200bn of unsecured debt right now so we only need a slice of the market thats already there!
This is an important distinction which helps keep us on the right side on this line, it means that we’re trying to convince Monzo customers who need a borrowing product to choose us instead of someone else, rather than borrow when they otherwise might not have.
As for rules, there are a few! CONC3 is recommended reading from the FCA, and we also have some internal rules to make sure we’re not being too spammy or coming across pushy. We don’t always get the messaging cadence right first time but we do learn and adapt our approach
Absolutely yes, I’m convinced this has happened many times!
Are Monzo interested in exploring the secured lending market? Either things like car lending, mortgages, or other things?
What do you see as the key differential for Monzo to be able to gain some of that market on the unsecured borrowing market? Is it simplifying the flow, improving availability of the loans/overdraft in app, or are there other areas (interest rate) that Monzo are looking to challenge with?
Obviously in proportion, not a silly long worm
Back to actual questions - is there anything work practice from your previous roles you’d like to see applied at Monzo?
Heads up! @ConnorPB’s AMA ends today so feel free to drop a question in before we close it up
Historically it was almost all bureau data, but today use a lot of information from both sources to come to a lending decision.
For a customer who uses Monzo as their main bank, we can potentially confirm things like their income with a higher confidence than the bureau can.
We’re investing a lot in using account data to help us make more accurate decisions.
Sorry that’s a bit vague, can’t go into too much detail on this one!
Monzo has all the energy and passion of a startup, but the benefit of some really well structured practices that are essential for a bank.
Our governance teams are doing a great job of making sure we have the necessary processes to work efficiently and compliantly - without adding the red tape and bureaucracy that tends to slow things down in big corporate places. We’ve got some work to do to make sure we stay nimble while we scale for sure!
The products are pretty well integrated in the sense that they take each others real time status into account when an application happens.
Overdrafts and Flex have more similarities in their decisioning given they’re both revolving credit lines whereas loans is quite different - all have their nuances though so none are exactly the same
Great question! We track quite a few individual metrics but my favourite is wallet share, which helps us understand how much of our own customers borrowing is happening with Monzo.
I mentioned in a previous answer that we aren’t aiming to grow the overall amount of borrowing thats happening - rather trying to grow our share of the borrowing that Monzo customers do.
I’d say we’re interested in all of those things, but as always it’s about prioritisation and timing as well as the opportunity to differentiate.
Taking mortgages as an example, we need to reason though whether the biggest need we can address first is to do with the actual mortgage product or the steps leading up to it - like getting a deposit together.
In unsecured lending, I think we have an inherently fair loan product. We also want to give customers more control over their borrowing - so that might mean tools that help customers pay off their loans more quickly or a range of products that can meet different borrowing needs (like Flex).
On interest rates - we actually have a fairly competitive range of rates.
The representative APR is the rate we’d reasonably expect to offer 51% of people applying. Other lenders sometimes have a fixed number of loans at a certain rate to guarantee a low representative APR which they can use for adverts.
And now, because I’ve talked about why I think our loans are good, I need to add;
If you’re eligible, our representative APR is 10.5% for loans more than £10,000, up to £25,000. For loans up to £10,000 it’s 24.1% APR representative.
How much is borrowing starting to be scaled up? I note in the last annual report it mentioned that Monzo would be looking to grow borrowing as we moved out of the pandemic, and I think fairly recently Monzo increased overdraft, loan and max Flex amounts? Presumably this is because Monzo are happy with how things like Flex are working and are now looking to turn the tap on some more?
And depending on your answer to that question, does Monzo have a view of how much borrowing will likely make up as a share of total Monzo revenue? Previously I think TS said interchange/borrowing/commissions made up roughly equal mind share and revenue buckets - but surely borrowing will be starting to become much larger, than say, commissions income from savings/referrals?