Nice article - I guessed earlier in the thread that they’d likely roll out similarly to how they did here! Exciting that it looks like some traction is happening.
Do you think they will do a US wide ‘lite’ rollout or maybe target specific states? I’m not too familiar with banking in the US so not sure If that would even be possible/ manageable.
If a US wide roll out is the only option I would have thought we will be waiting a while for anything - but not sure how long Monzo have been thinking about it and setting up logistically (although office is not in Vegas).
Does Stripe have a nationwide “de novo” banking licence? If they do it’s a potentially a good fit given that Stripe founders have invested in Monzo.
On the de novo applications themselves, this sounds like cautiously optimistic news:
(My understanding is that the only way to obtain a banking licence for all the US us through the FDIC’S “de novo” route - the FDIC being the regulatory agency responsible. Traditionally, banks have been licensed in each State individually).
If this is the case, do you see Monzo going through the “de novo” route or say selecting states to “dip their toes” so to speak. Could see going state by state at least initially to test the product in the US Market as a more palatable option than full US exposure.
I suppose by running a limited BETA and through partnership having the De Novo Licence will work as an advantage. Although the pool would be massive Monzo would be able to be selective on numbers and grown naturally rather than testing and then having to apply for De Novo.
I read somewhere that Revolut were applying for a California only license but that was some time ago and not sure where they are with their US expansion.
I’m a bit confused. Think of partnering with an existing US bank as the equivalent of the UK prepaid days. The de novo licence is the same as becoming a proper UK regulated bank. Partnering means they could launch before having a de novo licence. Indeed, if they had to wait for one there wouldn’t be any benefit in the partnership phase.
The Monzo crowdfunding prospectus (March 2017 edition) put it quite well:
A US expansion is possible via sponsor banks. This could take 6 months to get live, and short-term revenue would be generated by higher US MasterCard interchange rates. Medium-term profitability would depend on a partnership with a US-regulated unsecured consumer credit provider or acquisition of a US banking licence.
What I mean is that by going through partnership (whilst making the application but not having the license) they will be effectively replicating what they’ve done here by first doing pre-paid (now with a partner bank) and then when the time is right making the application.
I think launching with a pre paid version or lite version as they did in the UK is the best route.
Allows them to gain customers while working towards a full current account launch in an MVP style arrangement (as the article points out).
Due to monzo already having their in house processor and other systems up and running hopefully the biggest hurdle besides connecting to new payment systems (US version of FPS, if there is one) will be the application to become a full US bank.
Monzo have also learnt a lot of lessons from the UK, like how they were taken for a ride on foreign ATM withdrawals and how they managed to bring down the cost of running an account so less capital was wasted.
I’d be interested to find out when it happens how different the US and UK versions will be in terms of available features to users or if it will be largely the same with most of the product work taking place in the UK.
What was interesting to read in your article, is that the ‘lite’ version will be much more capable than the Mondo/Monzo prepaid days (emphasis mine):
I understand that the plan is for the initial Monzo U.S. product to offer in-app signup, the trademark “hot coral” Monzo debit card, an account and routing number, the ability to make and accept payments, ATM withdrawals, and real-time transaction notifications.
Though I’m curious why a bank would agree to partner with Monzo in an initial phase, knowing that Monzo’s plan is to get their own licence and compete directly. Other US ‘neo-banks’ have run on other banks’ infrastructure, but that seemed to be their model, not an initial phase before switching to their own licence. And the prepaid days over here used Wirecard who are in a different business than Monzo is (retail current accounts).
What impact will a US Monzo launch have for UK customers? Potential implications:
-Will we be able to get US account numbers (important for things like Venmo/getting paid by US companies) like with TransferWise?
-Will we be able to hold USD balances?
-Will we be able to withdraw more than £200 fee-free in the US?
-Or would we be able to open a US Monzo account to be able do these things ^