An interesting thought - Ultimately if the asset was on our own balance sheet then I suspect it would still come with the same degree of regulation/ cost.
And by cost I mostly refer to the people cost of building the product, calculating capital to hold, monitoring the portfolio, forecasting losses, running decisions past our internal risk team, external audit reviews, discussing with regulators, customer support costs, etc. (some of these may not apply for all your product examples)
My own personal pick for investment would be airbnb at this point (as well as Monzo of course!!)… Imagine the boom in holiday lettings once everyone is allowed to go on holiday.
Yay Also imagine the bounce back in foreign interchange revenue
Even if they ran these it would separate to their current business which is a retail bank. I doubt branching into new business areas is the right thing for Monzo to do right now. All these things can be unprofitable on their own especially in the early days. They need to make the actual bank profitable first.
Mortgages/lending
This is the better question because of course the basic business model of a bank is that you take in customers deposits and then lend them back out again for profit. The basic answer is - they do some lending and are trying to increase the amount of it. But lending is also an extremely competitive business with huge compliance and risk overheads so they are building this part out slowly. I also think - Monzo is run by tecchy people, not banky people and they seem (to me) to have struggled to develop this area in the way other new banks have.
A personal opinion is that increasing the amount of lending going on is the way for them to increase profitability. But as Ordog mentions - everyone has ideas on this
Do you think this sort of passive aggressive post is worthwhile?
“Hang on guys, there’s someone on the forum that says selling more of the company for less isn’t sustainable. Lets have an all hands meeting to discuss this groundbreaking news!!”
Certainly. Tom has left, Monzo is in trouble, and as you rightly confirmed, in danger of following the same fate as Xinja… some out-of-the-box thinking is definitely required Quoting Katherine Long:
“Xinja did not prioritize early on, trying to create a sustainable future with revenue-generating products, and it was too late when it finally dawned that it needed personal loans and wealth services…”
Out of interest - i’d be keen to know which “other banks” you’re referring to?
After ~20 months of offering overdrafts and ~7 months of offering personal loans (Feb 2020 financial year end), Monzo’s lending was at ~£144 million. It’s interesting you consider this “struggling”?
Although granted covid then hit and our lending has slowed somewhat since then
Would you say that she doesn’t have a modicum of a point about revenue-generating products and wealth services though? Or do you think they are not worthwhile?
Was interested to find this article from Monzo from 17 July 2019… hopefully it’s something Monzo can come back to (IMO)
Well that’s a shame. Personally I really feel like these things (if they could be implemented) would really help Monzo level-up. Given what Theo has said and the previous testing it doesn’t seem like Monzo disagree with me completely
Seems to be the salient point doesn’t it. As you say, Monzo have obviously thought about it, and for whatever reason decided against it. Community members continually taking to the forum to voice their surprise/dissatisfaction that these things haven’t been implemented (despite a number of reasons why having been explained further up the thread), is a bit tiring and probably not very helpful for those working hard to make Monzo a success.
If you know so much, you should apply for roles there to help them out.
All lenders change their lending offering over time - it happens behind the scenes so most of the time you have no idea it’s happening.
My guess (and my hope) is we go back to doing larger than £3,000 loans soon - when and what exactly this looks like, I don’t know (and to be honest I probably wouldn’t share publicly anyway I’m afraid - I’ll leave that to our marketing team).
There are never any “changes to lending products all together”, things change over time and the direction Monzo (or other lenders) go in will change depending on lots of factors.