Rethinking the Marketplace / Integration with other services

Over in the Monzo in 2021 Wish-List topic, number three on my list was:

I thought it might be interesting to take some time out and explore what I mean by that. So what do I mean?

The Past

Monzo was designed (originally, at least) to be a financial marketplace. The digital location where all your financial information comes together in one, easy to use place. And, looking at the budgeting poll, it looks like there’s a desire to see things like net worth in the app.

The marketplace hasn’t really become a thing. The was some minor flirting with energy switching (I think switching to Bulb might still be in the app), but that seems to be more like an arrangement with one company. And, after initial experiments, Monzo decided that integrations needed to be deep, so along came savings pots. Partly due to the current economic environment, these haven’t really taken off - interest rates are low and they seem to be withering on the vine.

Like many things, it felt like Monzo didn’t really invest enough time or effort in either of these. The energy was too basic and not really taking advantage of the data held in Monzo; the savings pots are arguably too deeply integrated. The objective has to be to move to a commoditised set of financial services products that can be hooked into an app by standard interfaces. Instead, savings pots seem to necessitate bespoke agreements and integration - and yet have customer unfriendly feature like delays in withdrawing money. And, while I absolutely get the need to make money, I’m not sure that the top-slicing of interest was ever going to be effective.

The Future?

Financial services are becoming commoditised. I think we’ll end up seeing apps that provide the customer experience, then a whole bunch of different savings (and current account) providers. But they’ll be a bit like electricity suppliers - they all do the same thing, so it’s just inertia or cost that keeps you with the same provider.

Monzo could really drive this change. There are lots of financial service organisations that would love to tap into 5m potential users. And Monzo isn’t (wasn’t?) building a vertically integrated model. So savings providers (like regional building societies) shouldn’t fear them. But I digress - I’ll get onto the commercials later.

There are a few key to cracking this, I think.

From a technical and product perspective:

  1. KYC: firsly, you want to be able to open accounts with third parties from the Monzo app. So that means a mechanism to share/delegate/assure KYC with other banks and financial institutions.

  2. Open Banking (Or Open Finance) Plus: we need a better set of open standards and integrations than exist through open-banking. Stuff that brings in all history, that provides hooks so that instant notifications would be possible and so forth. This would abstract the back-end banking services and allow different apps to service them natively; in practice, this would allow the Monzo app to display other accounts as natively as it does its own.

  3. In-App Templates: if we’re commoditising financial services, the Monzo app will need a (small) number of standard templates to represent financial data. A savings or credit card account, for instance, might use a similar template to the Monzo current account (a balance and list of transactions). Share-trading apps might need a different template (graph and line items for shares held?). There will be others.

  4. Better Use of Data. With user consent, let the Monzo app mine your data for you. Tell you how much you’re spending on bills, how much on your mortgage, and the rates/performance on your credit cards, savings and investments. Give me a regular report on their competitiveness. Let me switch with a tap.

  5. Support It’ll be essential to be clear about where support is for different products. So split out support for the Monzo app from support for the Monzo current account. And have separate chat buttons (or buttons to call customer services) from other providers in Monzo. Making it easy and straight-forward.

From a commercial perspective:

  1. Monzo needs to make money. So do other companies. And customers want a good deal. This means that Monzo should not top-slice interest rates: instead, suppliers should pay Monzo an introduction fee and an account servicing fee. The market already pays out introductory fees (that’s how Monzo makes money out of the Bulb switching) - and I’m sure a large swatch of the market would pay £1/month for their savings account to be serviced in an app they don’t need to develop or support.

  2. Creating a platform and don’t be greedy. The app stores have shown how profitable this is. Target older organisations which provide good financial services but don’t have apps or digital nous. I’d start with regional building societies. Keep fees low and start early. And don’t be afraid of integrating other current accounts into the app - especially if those organisations will pay you £3/month/user for the privilege. But start slowly and get a critical mass. And keep the standards open!

  3. Think about an ecosystem for Fintech: when these things get aggregated, think about what can be done for paid accounts. Imagine a paid account that gave you the features of Freetrade Plus, Monzo Plus and Flow in one package. Or a separate offering that let you buy trackers or Vanguard style investment products in the app.

  4. Position Monzo as an identity provider. If Monzo can crack #1 (KYC), then imagine a basic proposition where you can ‘login using Monzo’ for websites alongside Google and Apple logins. But unlike those providers, Monzo could guarantee identities, allowing for one-click opening of other services that require identity. And that’s another revenue line.

What does that all mean to me as a user?

  • Basically, you’d have loads of products in the Monzo app that you could open with one click.
  • You’d be able to see these like connected accounts - but better than those you’d be able to service then natively, get notifications and contact support for those companies, all from the app.
  • Monzo would get a bunch of additional revenue streams and - in my view - cut a profit very quickly.

Phew, that’s a lot to get out. I’d tag the CEO, but I don’t think he knows this place exists. Maybe I should write to him?

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I don’t have too many initial thoughts myself on this yet, but if it hasn’t already been said before, it’s commendable how much thought and care goes into these contributions of yours.

You’re a real asset to this community and these types of posts spark some real interesting discourse, forming the basis of a sounding board for ideas, many of which go on to sound really appealing. I hope Monzo appreciate that and still read and listen to these, and the conversations that follow.

The aspect of this that got me, should this be a route they go down is the future of KYC. If the market heads in the direction you’re thinking, having Monzo as the single KYC processor, could be game-changing, and not just for banking, as the uses could extend far beyond. There’s a precedent here though that would require caution, and darn good privacy policy to work well for customers.

I’d be perfectly fine with, and even love a system whereby Monzo verifies my identity and then merely vouches for me to others, rather than handing my data over to them. But be the Sign in with Apple variant of this, and not the Sign in with Google one, no matter how tempting the revenue from the data may be in the short term.

With that said though, I still steadfast believe the prospect of the hub is dead, and should it ever come to fruition, it’s going to need someone on the scale of Apple or Google. Anyone smaller, I fear would eventually wind up being Sherlocked by the big guys’ foray into fintech, as that feels like it’s more their arena.

I’d rather Monzo focus on becoming a darn good, simple to use bank with an Ocado like approach. Build all the products you’d expect a Bank to offer, but remain focused on innovating through the underlying technology. Use that advantage to make your bank better, cheaper, rewarding, and easier than the others. Owning the whole experience, I think, is the key to staying ahead of where the puck is going to be and provides them with the best opportunity to be the best, rather than relying solely on external partnerships.

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I’d be interested to know how recent senior management changes have affected the product vision. Has the vision now shifted away from financial hub and toward traditional bank? If so, is it a small shift or a large shift?

I don’t think they do top slice the interest rate. My understanding is they charge the provider a % fee and the savings provider can provide whatever interest rate they want to Monzo customers. If the provider decides to lower the offer to the monzo customer (compared to what they offer on their own platform) that’s up to the provider.

It seems the main difference in your suggestion is a fixed per customer fee from monzo to provider instead of a percentage fee.

I think this is to be played for. Tech does commoditise stuff, but the big banks have every incentive to stop that happening. It’s a game of chess and I’ll be interested to see what happens. I think that there momentum is behind the concept, though - if there’s anyone focused enough to make it happen.

I see where you’re going - and there are signs that Big Tech is moving in that direction. I think we’ll have more certainty this year: as Facebook, Amazon and others start to get even bigger (and even emulate some of the trappings of nation states with digital currencies and the like) then I suspect we’ll see a tipping point: either regulators will accept their inevitable growth or they’ll be split up or otherwise curtailed. I think the latter is more likely right now - but that’s a whole different story. Where Monzo’s mission fails, I think, is in the idea of becoming global. Banking, perhaps more than anything, is heavily regulated and is cultural. Whereas Google can offer the same service everywhere, Monzo can’t (easily). And I suspect Big Tech would like to stay way from heavy financial regulation. But I don’t know.\

So I want Monzo to be both broad but deep. But I think this alone is a deeply unambitious. It probably describes Starling quite well - but I think unless Monzo gets into rethinking the industry then it’ll always be nice but a little bit meh.

I think this is more or less semantics. The point I was making was that the customer should lose (or perceive that they lose) out. But I think that’s what happened here: Monzo has taken a cut of x% - and the same providers seem to offer the same product but with the addition of x%.

Not really, I think it’s more complex and nuanced than that, although I can see why it might come across like that. I think that some providers might pay to be in the Monzo app store. If there was this deep level of integration, which meant that they didn’t have to develop and support their own apps, then they could see that being financially advantageous. Take a current account offering from, for example, Yorkshire Building Society. They used to offer one through their Norwich and Peterborough brand but, as I understand it, gave it up because it cost too much to service and they’d need to massively invest in thing like an app. My hypothesis is that if Monzo were to give them the front end, and all they needed to do was hook into a few APIs, that might well be worth £3/user/month. But I don’t know - it’s all supposition. I think for the less taxing integrations, you’d just be looking at an introduction fee (but I accept that probably wasn’t all clear in my original post).

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Me too! I think I was, with hindsight, slightly unfair on Monzo in the way that I phrased that. I suspect that there’s a period of reflection and strategising* going on, which is fair enough. I do hope we hear from the new management soon, though. I suppose I’m a little frustrated with the radio silence of the new team, unclear on their direction of travel, and unsure what their commitment to Monzo values and the community is.

*I can just about live with strategising. But if I get wind that Monzo has been dabbling in ideation then I’m CASSing away immediately.

I’d be really interested in a Summer 2021 Investival, even if it had to be entirely online

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Hmm, I seem to have a comment in this thread “awaiting approval”.

Wonder if I said a naughty that caught a filter somewhere?

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This happened to me too earlier on another thread. My comment was eventually approved by a moderator. Discourse shenanigans. Maybe we just post too much?

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Absolutely agree with this. :raised_hands: So many great threads and discussion points, which I hope Monzo are reading.

On topic mind; I don’t know if I have too many opinions about Monzo as a Hub yet, but the one I do hold, is that I need/want it to be a near seamless transition between providers.

I really did wish Plus/Premium would crack that a bit better than they have - but for me, the best version of that would be a “monzo like” experience with those other providers. Maybe thats the “Sign in with Apple” like approach that @N26throwaway mentions, or the Monzo flavour of that.

But the version that I don’t like is what you get in Premium, with “Great, here’s your policy ID, bye”. I really thought they had a good opportunity to properly bundle a product into the app there, and I think it’s a shame it wasn’t taken.

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I know that @AlanDoe has been playing with some filters to stop folk from posting their phone number, email address or personal data. But don’t worry - you haven’t done anything wrong (and if posting too much is a crime then I should probably be banned).

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For the record the idea of being able to see your ‘financial life’ in Monzo is definitely not dead. We wouldn’t have spent time developing connected accounts (& we wouldn’t have lots of plans in place to develop them :see_no_evil:) if it wasn’t.

There is a huge amount of work that goes into onboarding different suppliers, and sometimes we get quite far into the process and for whatever reason it falls through. There are also ongoing commercial relationships to manage, which also take time.

I’ve said it before and I’ll say it again but the focus we’ve had on our product and our goals has never been stronger. You’re going to see lots of amazing stuff in 2021 (I promise).

Also, next time TS does a Q&A at All Hands I’ll ask him if he wants to come say hello on the community on your behalf!

P.s thanks for the threads as always @Peter_G plenty of food for thought!

I’ve shared the thread with our product team too :pray:t3:

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I’d say I’m excited but sadly I’m beyond that. But I’m hopeful that this does indeed come true and you can not only get me excited about Monzo again but get me to sign up to Plus

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That just makes the challenge even more fun :rocket:

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Sadly, I cannot recall the last time I was excited by a Monzo release :thinking:

All the hype building up to each of the recent releases has turned into :man_shrugging: , for me, when product seen.

Each to their own though.

Guess my Monzo account does just what I want it to at the moment, so perhaps my expectations are non-existent, thereby nothing to fulfil :man_shrugging:

Not into micro-managing my financial spend any more. My expenditure is always less than my income.

Perhaps the pandemic has just numbed my wishes and wants for the time-being.

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I wish we could develop something exciting for everybody, but sadly we have to prioritise :hot_coral_heart:

I agree with this. I have just been feeling :woman_shrugging: with all the latest releases. I don’t need to get paid early; I don’t want the types of insurance on offer and I don’t need to budget. I have always lived quite frugally so my income more than covers my expenses and I can’t cut down on expenses any more (unless Monzo magically gets itemised receipts for Tesco and tells me I spend too much on fancy bread and should buy a Tesco loaf instead). What I’d love is better connected account support, and to be able to track my net worth with real-time integrations with investments, savings and loans.

Oh and to see chat return to everyone, 24/7

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I forgot to come back on this earlier! I’m sorry if I wasn’t precise, but I definitely don’t think that Monzo as a single KYC processor for the industry is good or desirable.

I was trying to say more that the platform model could / should mean that the platform holds KYC. And passes it onto others or vouches somehow for an identity. I’d hope there would be more than one platform, otherwise monopoly issues apply.

I was being a bit expansive in my thinking about Sign In With Monzo. We know that the world is rapidly digitising, yet there are still times folk need additional proof of identity online - this is why the government is consulting on a digital identity and attributes trust framework.

The potential vision here would be to look to Monzo as a digital identity provider. That could help with both the KYC issues for account opening referenced above (indeed, it might be the only way to do it in the future), and also potentially open up other revenue streams - ideally, a pay per identity verified model, not a data aggregation and sales model.

Does that make more sense?

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Thanks Dan - that’s reassuring!

The cynic in me wonders whether it’s because of real drive and vision in this area - or because it’s a nice revenue generator for paid accounts. But I suppose it can be both (or neither, actually) as long as I enjoy and value the product.

Thank you! I think it’d be a lovely touch. Perhaps we could do a coral-crew hosted interview session?! :hot_coral_heart:

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I do think this is a problematic factor in how Monzo is/has tackled budgeting - and one I hope gets done differently in the future (and I’ve said lots of that in the dedicated “make budgeting better” thread).

But I think it’s a shame that, in the Monzo universe, “Budgeting” has almost become synonymous with “cutting down costs” or “saving money”, when in reality it could open more doors for more users as “Making a plan for my money”, which is so much more interesting and empowering, IMO.

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Sort of! The government looking into digital ID solutions was where I was drawing inspiration from too!

I’d just like a system, where I’d only need to go through the KYC process once with Monzo, then once done, Monzo can just vouch for me when signing up for something else. I think we’re both thinking of the same thing, just explaining it differently.

Done right, I think there would be good privacy benefits for such a model (I.E. not having to send electronically send photos of my passport to dozens of different companies to entrust with protecting), but done wrong, and it could be dreadful for privacy. There’s been quite a bit of backlash from industry experts on the government proposals for proving ID online.

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