Monzo's annual report (2020), media stories and comparison with other providers

your guess is as good as mine Harry :slight_smile: why do you think it only appeals to “the diehards”

It’s a tough spot to be in, but they have time to try a few things before entering administration. They will need to find a path to profitability eventually.

It looks like Revolut is largely taking the premium/metal customer base.
It looks like Starling is largely taking the Business Banking and older/profitable customer base.

Monzo seems to have gone after millennials and the least profitable segments of the market :confused:
Hopefully TS has a plan!

I’m sure he does, it would be detrimental to his future career if he didn’t! I imagine there will be sweeping changes in the coming months.

Entering administration!? I really don’t think that’s likely to happen. In my opinion, in the worst case - long before that happens - Big Tech companies will swoop, and seek to buy them out. Amazon, Apple and Google are toying with fintech ideas, and would be keen to buy up any company that gave them a head start.

Not to mention to incumbent banks. Lloyds Banking Group were once rumoured to have offered £25M for Mondo, and that’s when they only had a few thousand prepaid customers. I bet they or other banks would be willing to pay a great deal more today - even if it were just for their brand or their rapid technical development capability.

I could be wrong, but I don’t think administration is likely.

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Going to stick my neck out and say this is and absurd statement and Monzo will never go into administration.

Best worst case: they’re still a start-up who can trade on future potential to get more VC funding. Probably they could get more from the crowd too, but that is riskier.

Worst worst case: the Monzo name and technology are too valuable to get broken up in administration. Rather, they will be bought out or taken over long before that point. I believe the board, while principled (they’ve rejected takeovers before) are not suicidal. If everything’s crashing down the pan and a legacy bank or big tech company comes along and says “We’ll buy you”, and there’s not better option, I believe the board will reluctantly take it.

But y’know, it’ll only reach that point when things are the lowest of the low, and we’re some fair way off that point. It’s weird how in the rush to bash Monzo many people seem to forget that COVID-19 and really hit the whole sector as well, not just Monzo.

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I really disagree with your points.

VC funding will stop at some point, it’s not going to be available to monzo forever. Their losses are nearly doubling every year and they’ve pretty much launched all their revenue generating products. VC fatigue will become very big if Starling and Revolut are profitable by the end of the year and monzo is losing £114 million a year. Starling are on track to be profitable as per their report today and Revolut haven’t deviated away from their goal of becoming profitable by years end.

I think it’s an absolutely huge stretch to think someone is going to swoop in to acquire a company losing £114 million a year while their two biggest competitors are going from strength to strength and near profitability. Why wouldn’t legacy banks just let monzo fail and get their customers and deposits for free?. They will have to go somewhere if they leave monzo to fail. The annual report has shown monzo may have millions of customers, but they’re largely millennials who are low income customers that don’t drive much revenue. Based on all the press over the last year, glassdoor reviews, and annual report, I don’t think many will be looking to align with the monzo brand.

Again, Covid really hasn’t hit the whole fintech sector; it seems monzo have been completely decimated while the other big fintechs let go a small number of staff or none at all. Starling announced their annual report today and are on track to reach profitability. Revolut are raising money at their current valuation without a down round like monzo. Nubank, N26, Chime Bank, Tide aren’t announcing similar news to monzo.

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Glassdoor klaxon :tada:

Last time I took a look on there, a couple of years back, there were some very wild statements about Anne, so I take little notice I must say

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I think you’re missing the point of how and why such acquisitions take place. Other banks would likely not be interested in acquiring Monzo and running it as a separate loss-making business. They’d want to buy it in order to leverage the very dynamic parts of Monzo’s business that would complement their own shortcomings.

The majority of the big banks struggle to release one app version per month - let alone one per week. That capability is valuable. As is Monzo’s cloud infrastructure, which is far more advanced than their own, which often consists of dozens of interconnecting systems.

Finally, some of the legacy banks have ageing demographics, and would likely be very interested in tapping into a younger base of customers.

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Starling has been mentioned here a lot. With the recent news that they’re close to becoming profitable and they revenue is higher than Monzo’s (if that’s true), how are they doing that with 2x less staff and less funding to date? Maybe Monzo could have achieved the same with 2x less people which would obviously reduce the costs massively

Interesting post, @Justin. Starling and Monzo took very different paths, pretty much from the off and, even ignoring the profitability thing, they do look and feel very different.

It may seem heretical to Monzo fans, but I wouldn’t be surprised if Monzo itself might privately relish the benefits of attracting the older demographic and the stability that goes with that.

Won’t happen - just saying…:smirk:

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Starling took a different approach, with a focus more on business accounts earlier - it will be interesting to see how this pays off for them long term. It might have been the right move for becoming profitable faster. But if both are running strong in 10 years, I think if one was profitable a few years earlier than the other won’t be remembered.

I don’t understand why Revolut are used as a comparison. They are not a bank. They don’t have the same liabilities, same protections for their customers. It’s like comparing knock off products to the real things. Of course they make more, they have lower costs and risks.

Note: not saying Revolut are a knock off of Monzo - just that comparing a non-bank to a bank is apples to oranges.

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Agreed. They have carved themselves a very definite furrow, but don’t compare to banks.

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They have an EU banking license and have moved customers over to their banking license so they are a bank. They took a different approach of scaling and expanding before getting banking licenses to save on the extra costs from a banking license. They’ve been very open that they are now expanding their banking services and going for banking licenses

I suppose it’s the absence of FSCS protection which puts them outside the core. But then that’s a Revolut topic not a Monzo topic, so I digress.

(And they still do odd things around requiring revalidation of ID out of the blue. Too uncertain for me…:smirk:).

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Interesting point. The certainty with some of the big banks is that if they don’t attract more younger customers, half their customer base will be dead within 25 years - and that doesn’t seem like a sustainable business model.

Are you suggesting that being taken over by a big bank could be a win-win?

Because that’s now what they’d want from an acquisition of Monzo. You appear to be completely disregarding the technology stack, which is a massive thing. And even if all they wanted was customers and deposits? Still worth acquiring Monzo for - you get the whole customer base that way instead of a tiny fraction (because if Monzo fail, their customers are going to spread across loads of banks, not just one).

I’ll grant that I hadn’t seen Starling’s report at the time of writing the above, and it’s fair to make some comparison to how they’re doing. However my point was more on how the banking sector as a whole are being hit by Covid wrt/packed accounts being less viable (travel insurance problem) and potential bad debt making huge holes in the pockets of many. In those terms, the industry is facing many of the same issues as Monzo on an ongoing basis.

tl;dr, Monzo’s ‘troubles’ are overstated and it’s really not a stretch to see the value in acquiring Monzo.

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In a country with fewer residents than Revolut customers and a questionable regulatory background. They wouldn’t be able to cover Revolut deposits if something went tits up

They have the EU equivalent but see above

I wasn’t, but it could, now you mention it.

  1. Monzo gets a new direction and future certainty &
  2. Legacy bank customers get the digital benefits they’d never thought possible.

(I was being serious) I should think that unfortunate event applies to a very small minority. :smirk:

Someone who joined the forum to post negative comments constantly about Monzo thinks they are going to go into administration?

I am shook!

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