Whats Monzos Financial Strategy


(Kyle Risi) #1

Hey team,

I think it’s great that Monzo are so transparent with the direction the company is going in particular around the product and its features. But as I transition towards using Monzo as my main account, there is a little cloud looming in the distance around how Monzo is going to drive future profit and pay its way rather than relying on outside investment. I mean that money has to dry up at some point and a failing bank is no good to me.

There of course is this proposed strategy of open banking where Monzo provide third party firms access to its data in order to provide tailored products and services to Monzo customers, however as far as I am aware, this ia is both untried and untested.

What I would like to know is when will we begin seeing the first of these ‘open banking revenue driving’ initiatives, what should we expect from these in regards to how this will effect users, our personal data and the user experience from within the monzo app? I.e popups, ads, marketing emails etc

How confident are Monzo these initiatives will work and what will happen if Monzo fails to drive a profit for its stakeholders / Investors.

Finally what’s the deadline.

Just curious just cautions, just interested.


(Stephen Brinda) #3

I’m happy with what monzo are doing, but predicting the future is impossible these days… personally worrying about something we have no control over is waste for me. I leave things like that to the powers that be and I can enjoy life as we should. I’m sure monzo have a plan B and C for when (if) money runs out, but so long as I have a bank … I’m happy


( related to Monzo CEO, Investor in Monzo ) #4

and a Government guaranteed £85K backstop should things go wrong :slight_smile:


#5

I know it sounds daft but I think it will just “work”. Obviously they have plans, but how many other banks have such active users trying to understand and make it work?

I think we’re going to be pretty impressed a year from now at how much we can get done via the app, saving us money whilst earning monzo referrals.


(Kyle Risi) #6

Yes, as do most, but I want Monzo to succeed and would be interested in finding out how they will make a profit, or at least break even


#7

Most of your answers should be here: Q&A with Tom Blomfield

If you don’t mind watching a bit of YouTube! :stuck_out_tongue_winking_eye::wink::blush:


(Kyle Risi) #8

That’s a very strange thing to say.


(Excited about Christmas) #9

I see three points here:

  1. Overdraft fees. Overdrafts are becoming available to more and more users, and will eventually be open to all.

  2. Interchange. Every time you use the card in a retailer (as opposed to paying by transfer, SO or DD), Monzo make a little bit, even if it’s online. The more customers they have using it every day, the more they can make. This will be minimal though, because Monzo dont have ATMs, so they have to pay to use others’, and also a lot of people dont actually use their current account for retail.

  3. The big one as alluded to above - the marketplace. I can’t see this becoming intrusive in the app, but I can see it being a list of providers by category that you can browse and sign up for. This will take a while, but I think it will drive the majority of future growth.

Finally, I haven’t watched it yet, but apparently Tom said last night that new accounts are no longer loss-making, which is a huge step forward.


(Will flag Danny for cake) #10

Spread the cost I think will be the big one


( related to Monzo CEO, Investor in Monzo ) #11

sorry I read your post as you’re cautious and weren’t confident your money was safe in Monzo if it “failed to drive a profit” :slight_smile:


(Excited about Christmas) #12

In terms of FSCS, I have never had to go through it, but I doubt it is particularly smooth. I certainly wouldn’t have gone #fullmonzo if I considered this a realistic risk (compared to the high street, which I realise isn’t bomb-proof either)


#13

Was a good point though, I had to convince my Dad it was safe, he kept saying but monzo don’t have branches, like they keep you’re cash in the vault !


(Jack) #14

This is correct new signups are actually in the green which is a great achievement considering they haven’t yet started to fully roll out some of their revenue models.
Remember it often takes legacy banks around £100 to run an account!

Now they can run new sign ups as a positive it makes sense that one of their targets this next quarter is to focus on growth :rocket:


(Excited about Christmas) #15

Did he say how they’ve done it? Are they assuming a percentage of all new accounts will use the overdraft and/or do lots of retail spending, or are they subsidising them with revenues from more mature accounts? Clearly there is a cost to set up an account (not least the physical card, ATM usage and monzo.me) so there must be some revenue somewhere


(Jack) #16

My guess is it’s partially to do with dropping top ups. And estimating the income from regular use etc. Not many users have over drafts yet so I’d find it interesting if they presumed they would currently.

Also a much higher % of new users are going full Monzo.
It’s a lot slower for upgraded users although is going up at a steady rate.


#17

It’s long term users still topping up by card, not full monzo, “travel card” I’m guessing

New customers seem to instantly go all in, guess now brand established if they hear how good it is, they’re already ready to switch


(Excited about Christmas) #18

That’s all great for cutting costs, but it wouldn’t cut them to zero, because of card manufacture, ATMs and monzo.me


(Jack) #19

And to think this was the original reason why I joined Monzo over a year ago. Thanks MSE :smile:


#20

Their current projection to break even is late 2019, if that helps?

The commission (or referral, etc) of marketplace services and lending of money will be how they make most of the money.


#21

Just out of curiosity, if monzo said, would you cover your costs until you stop costing money, would you ?

I never ever imagine this happening, just wondered what people would say ?