What happens if Monzo goes Bust?

Having banked with one of the so called big banks for most of my life I now fully bank using Monzo and Monzo alone since 2018.

With the world as we see it today and what seems only to get worse over the coming months if not years and reading recently the losses at rival banks what happens to Monzo or other fintech?

I know my savings are covered by FSCS but if Monzo went bust tomorrow would I still have an account, could I still access my money?

I was around when Northern Rock went bust but I only held a mortgage which was transferred but I held no other accounts with them.

In a world we live into today I find myself thinking (eggs in one basket) or spread.

I have never really thought about it or cared but as I get older and family I do wonder what could happen and do I need a back up plan.

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No. And no.

Yes you will get your money back if Monzo went bust but it wouldn’t be immediate. I have no idea how long it would take but it won’t be as quick as using a ATM that’s for sure.

The FSCS protection aims to return funds within 7 days I believe but it’s probably be best to have an account open elsewhere so you can quickly transfer funds if and when something happens. Plus you’d need another account to have the funds paid into.

Starling and Revolut both offer a similar feature set to Monzo if you’re looking for a Monzo alternative and they haven’t had the same risk predictions about the possibility of going bust.

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ITYM yes and no. Because no bank going bust should negate the fact you have an account with them. For one thing, would be a bit tricky for the FSCS to pay out if they said “Can we have details of all your account holders?” and the bank said “No, sorry, we went bust, we don’t have any account holders any more” :sweat_smile:

But to answer the OP - I’ve said this before and I’ll say it again: Monzo will not go bust. Even if the worst comes and they start circling the drain, there will be someone swooping in with a takeover bid.

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Emphasis mine.

I think it is likely someone would gobble them up if they fail, but it’s probably best not to say that with so much certainty, because it’s not certain to happen. There will always exist the potential scenario, where if they do go bust, they just cease to exist.

Any bank can go bust. No matter how safe or secure you believe them to be. It’s happened in the past and it will probably happen again.

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For this to happen, you’d need myopic external parties and/or a suicidal board.

Monzo’s tech stack alone would be enough for anyone to come in with an insultingly low bid to acquire everything. Other fintechs have been acquired/swallowed/written off for less.

While the board have rejected offers to date, I don’t believe they’d continue to do so if the the writing were on the wall. If the only sensible choice is to sell, even at a low offer, I believe they’d do so. I can’t see them choosing suicidal failure over selling out.

So. On the one hand, you’re quite right to query my certainty. On the other hand, I absolutely stand by what I said and will continue to do so.

In some respects, the story of Sugru is relevant here. Popular product, well crowdfunded, but storm of circumstances saw them circling the drain. Board opted to sell out at 90% discount rather than than fail to nothing.

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Extremely well put thoughts there that are grounded in some solid logic. Can’t really argue against them.

At risk of verging off topic slightly, this reminds me Anki. A fascinating AI and robotics startup that were at one point featured at an Apple event. Then a year ago, out of the blue, with seemingly no warning they went bankrupt after a funding round fell through at the last minute.

Their products would consistently top Christmas charts, their backend tech stack seemed incredibly robust and valuable, and for sure thought someone would buy them very quickly. But then that didn’t happen, notices of server shut downs went out and app availability ending. Their assets were about to wither away into the void until another small startup picked them up on the cheap, and quite clearly lack the skills necessary to build upon the foundation they’ve acquired.

I loved Anki, but the experience taught me to never assume a company, or their assets, are safe from bankruptcy, no matter how valuable their product is to potential buyers.

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That’s something that plays on my mind too. Monzo isn’t even close to being sustainable and their business model is entirely unsustainable in it’s current state.

If they seek external funding again and it fails - it could be a very rapid downfall.

Plus you never know if the board truly believes in Monzo on its own they may reject all bids thinking they can swing out of it. Stranger things have happened.

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As others have said, it’s nothing for customers to be concerned about.

However, if you are at all worried that losing access to your money for a short amount of time would be problematic for you, open a bank account elsewhere, and if you can afford it, keep some rainy day money in it.

This approach makes sense even if Monzo never go bust. You never know whether your Monzo card might suddenly stop working for whatever reason, and having a backup is sensible in any case.

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I’ve said this so many times that I now have the link saved :joy:

Whoever you bank with, always have a backup account with either some emergency funds or an arranged overdraft.

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Being greedy, I have six :joy:

Admittedly each have other main purposes, but all hold small backup funds in case of IT issues.

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Plus the fact that the UK government would not let a bank go bust. It hasn’t happened in the UK since the 1930s.

Even if it did, the FSCS protection means you’ll get your money back in 7 days.

And btw - the capital held by account holders is ringfenced. So if they ran out of money, they can’t touch the cash in your account. Same thing with a cheap takeover - that doesn’t make any difference to the value of your account holdings. If you’re a shareholder, you can get nervous at that point.

But bankrupcy is not going to happen, so can we please stop with the doomsday scenarios. If you’re still worried, the only option left is to store your money in a box under your bed.

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I never realised they sold! I remember being a huge fa of it when it first came out.

Honestly thought it would be huge.

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I find an old biscuit tin is just as effective :wink:

I cannot highlight enough how important the above is. A few years back I had just TSB and, well, you can imagine what happened there.

For five days I had no access, not even via a branch, to my money (Long story short, they locked themselves out of my account - I had to wait for an internal fraud team to fix it) and it was horrible.

I was moving homes and had to borrow off my parents, relatives to get through (even though I had more than enough in my savings etc - which I couldn’t get any access to )

After this I have never had just one account and have savings separate to spends for this exact reason with two different banks.

To go back to the OP - whatever happens to Monzo having a Plan B is a good idea irragardless, this is also a reason why when I did bank with them, I was never full Monzo

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It’s always prudent to have a second account or means of paying for things, as people have already suggested, for a myriad of reasons.

It’s unlike to fail completely for the reasons stated above by others but it can fail. I don’t like absolutes, it’s a business like any other.
I’m also not convinced the current government would step in either.

If it were then you’d get your money back but you’d like to hope that it would be a controlled migration to allow people to switch out.

This is all hypothetical, they secured more funding, so they have money.

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Savings and Investment bank went bust in 1982. It was not bailed out nor acquired.

London Scottish Bank went bust in 2008. Except for a subsidiary of their business, they were not bailed out nor acquired.

BCCI went bust in 1991 and was not bailed out nor acquired.

Those are just a few I’ve found from a brief google. There could be more.

Of course, these scenarios are not for us to worry about though. And should the worst actually happen, we have FSCS.

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Sorry, I should have been clearer: no UK consumer bank has gone bust since the 1930s. (Savings and Investment wasn’t in the UK, London Scottish was a subprime lender, BCCI was a private/investment bank)

Every time it has happened in the past century, the bank has either been bailed out by the government or taken over. In every case in the past century, no consumer has lost any savings.

Even when an Icelandic bank went bust in the 2008 crash, the UK government covered UK savers, even though they had no legal obligation to do so.

Quite simply, if you have less than 85k in Monzo, you’re 100% safe. If you have more than 85k, you’re very likely to be ok, but if small risks worry you, you can spread it across different banks.

If you’re worried about the 7 day FSCS delay, and if you can afford to, keep a small amount in another bank.

But this is all really end-of-the-world conspiracy theory level stuff. Monzo isn’t going bust.

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I imagine from here:

In most cases, for deposits, FSCS aims to pay compensation within seven days of a bank, building society or credit union failing. We will pay any remaining deposit claims, which are likely to be more complex, within 15 working days

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