šŸ“° Monzo's Tom Blomfield on cutting the crap from financial services

http://techcitynews.com/2017/05/11/monzos-tom-blomfield-cutting-crap-financial-services/

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Thatā€™s a good read. Itā€™s not great to hear that the fee free foreign transactions could go away at some point but I donā€™t think that Tom could guarantee that they wouldnā€™t so Iā€™ll worry about that if & when itā€™s announcedā€¦

This is only a minor detail but if this is correct -

Another difference is the low level of risk Monzo takes with its depositorsā€™ money, he says, with only some 20% of user deposits loaned out, versus up to 100% within large high street outfits.

Then Monzoā€™s ethics page (which currently says that ~10% of deposits will be loaned out), needs updating.

I think the author may have possibly embellished/speculated the point about free forex possibly going away - the way it is written is more a solliloqui than dialogue.

Would be very interested to hear from @tom if this was actually discussed. Apart from being anti-punitive fees I know he has previously said along the lines of ā€œforex is on a trend towards zero margin so itā€™s not something for monzo to differentiate withā€ so I find it very hard to believe they are going to whack fees on it. They might as well be NatWest if thatā€™s the plan.

All journalists seem to have to add a ā€œhoweverā€¦ā€ paragraph towards the end for integrityā€™s sake even when they have nothing contrary to say. My guess is misguided journo speculation!

Edit: I just re-read it and seems I skimmed past the quote from Tom about not being able to commit to free forex! Whoopsā€¦ would still be good to hear why he canā€™t do so.

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Iā€™d like to hear more on this from Tom.

I agree that this aspect of monzo was never the selling point, however, it has been one of the silent selling points.

Yes indeed. Iā€™d envisaged relying in the future for cheap foreign currency on Monzo and dropping the Revolut card. Guess Iā€™ll leave things as they are.

It looks like itā€™s worth pointing out again that nothing has changed & no oneā€™s said that Monzo will start charging fees for foreign transactions.

Obviously if Monzoā€™s finances start to get tight then they would have to reconsider. But why would drop such an attractive feature - which is responsible for so many users signing up? Any FinTech that starts to struggle will charge more fees - just like N26 - so Tom canā€™t say that Monzo will never charge this fee.

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It would take a brave bank manager to promise free forex forever in the current political climate! I would hedge my bets too. Obviously I want to keep it, but if I canā€™t, I would hope that Iā€™d only be charged at cost. Itā€™s not in their plans for a revenue stream.

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This interview was pretty wide-ranging, and maybe I was too vague at the time!

Weā€™ve got a clear goal - we want Monzo to be a financial control centre for a billion people around the world. But the path to getting there is not set in stone. We tend to be quite iterative, so making cast-iron promises about the future is frankly impossible.

If youā€™d have asked me two years ago whether I could guarantee weā€™d still be called ā€œMondoā€ today, Iā€™d have probably said yes. And I would have been wrong!

By the end of 2017, weā€™re currently forecasting that less than 10% of our deposits will be loaned out. But as that number is currently 0%, itā€™s hard to say for sure. We break-even if we lend out about 20% of our deposits, which I guess weā€™ll aim for some time in 2018 or 2019.

Iā€™ve said before that I think FX will tend towards zero cost to the consumer over time, and I still believe that. Thereā€™s very little inherent cost in it, and the large banks are ripping off customers.

The exception is foreign ATM withdrawals, which cost Monzo around 2.5% for any withdrawal outside of the EU. So if you take out Ā£200 in India, that one withdrawal costs Monzo Ā£5. We offer it to our customers for free. So you can see how those costs add up over time.

So for now, if youā€™d like to help Monzo out, please do try to pay in-store with your card, rather than using ATMs, where possible :slight_smile:

(or contactless, in restaurants, online etc, etc. Just not ATMs! Theyā€™re very costly)

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Thanks Tom, this is really helpful.

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Given the cost of foreign ATM withdrawals, I wonder if some kind of restriction is needed(regular funding, direct debits etc), to stop Monzo becoming a second account used just this purpose. I recall nationwide had this problem, around 10 years ago when they scrapped foreign use fees

A push notification the first time a user withdraws outside the eu with your message would enlighten a lot of people. I personally didnā€™t know of this cost and will try to avoid incurring it in future.

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