Predictions for Monzo (and fintech) in 2022

I always find the pay-for-interest dynamic to be a bit weird. In the end: who’s paying whom? “Pay us a subscription so that we can pay you back a bunch of money”. Weird.

Hahahahahahahahahahahaahahahahahahahaah

Oh, you’re good with the jokes. Very good.

Nobody is stupid enough to pay to get such low interest. It’s just a bonus.

But 2% :rofl::rofl:

1 Like

Well it’s already 1.5% for premium. Is an extra 0.5% that much more?

1 Like

It’s 1% for Plus, but yes, in interest terms it is.

2 Likes

For me it’s more about a reduction (albeit a small one) of the subscription price.

I always like to keep a paycheck’s worth in pot that I can access immediately and hassle free in an emergency, so it’s not like that money would have been earning interest elsewhere without a fee.

It also encourages people to hold more money with monzo so its a win for everyone.

1 Like

I posted a bit about this before over here:

Monzo can quite easily ignore a marginal increase in interest rates for Plus/Premium (although I wish they wouldn’t - could @AlanDoe invoke someone from the Paid team to give us their thoughts? :thinking:) but as the rates increase above that, it might make more (short term) financial sense for Monzo to attract more folk to the free account (or create a third “paid for” tier that doesn’t pay interest but gives you the software features for a nominal monthly payment). Long term, it probably makes more sense to increase interest rates on Plus/Premium, even to the point where the customer can make money out of the account (or get it practicality for free). That way, you’ve got a set of sticky accounts that will maintain revenue when the cycle resets…

Edit: I’ll do some proper modelling later (maybe) but some rough sums show:

  • Monzo would need to pay an interest rate of 3% for Plus to be free to the customer (assuming they kept the whole £2k in the account)

  • This changes to a whopping 9% for Premium.

The former feels like it might be possible. The latter not so much (eyes his hat nervously).

1 Like

Premium is good value vs Lloyds £21 for pretty much the same thing.

£10.50 for LBG staff but I’m leaving soon so premium upgrade has been submitted :sweat_smile:

2 Likes

lazy web alert

Does Lloyd’s pay interest please? If so how much on how much? :pray:

1 Like

Club Lloyds do, let me check.

Not a blinding amount :sweat_smile:

2 Likes

I’ve always thought the premium/plus model was a bit… fragile. It’s threatened by interest rate rises, competitors sharpening up their online banking tools and apps, other banks’ new credit/debit card designs. As well as monzo needing to differentiate their core product from other banks’ products - which is in itself not an easy task - they also need to maintain differentiation between their free service and plus, and premium.

Time will tell, I guess.

3 Likes

My working hypothesis is that it was an emergency cushion in a low rate (plus low travel) environment when Monzo faced an existential threat.

My gut says that it’s probably a useful thing to continue with, especially if they can maintain a spread of ~1% between base rate and paid. But I’ll try and test that later…

2 Likes

I’ll add it to the 2022 wishlist :thinking:

5 Likes

Touché :stuck_out_tongue_winking_eye:

Don’t need to pay for the Platinum tier to get those rates though. For those who earn at least £1,500/month access to those interest rates can be essentially free via Club Lloyds.

1 Like

Yeah I get platinum £10.50 and only have to credit £1500 then move it again to waive the fee, and get 6 cinema tickets a year with club Lloyds.

Soon as I leave though I’ll just switch the account to normal and use it for a switch bonus at some point

The interest is not a straightforward perk. It is there to attract higher balances. It is also there to retain people. Some do not get the full interest as they have to pay tax on it. It also offers ability for people to give more money to mozno by opting out of receiving interest. It shares some retention power as the plus/premium physical/virtual/flex cards do.

It is hard to tell what the impact of increasing/decreasing interest rate would be.

My wife opened a current account specifically so that we could have a joint account. If that’s really not going to happen it’s time to look at the others

Joint accounts exist and work. They are just lacking some nagging features that you might not even notice. What do you need your joint account to do?

1 Like

Thanks for your message
We wanted a joint account for general household bills. So far Monzo will not allow us to open a joint account and cannot, or will not, tell us why so we are quite frustrated and will, reluctantly, have to go elsewhere

Kind regards,
Peter Jones

I guess that’s a rather different and more personal issue then.