Thanks yes I know the numbers. They are indeed doing well.
But they are not profitable, and that was my point. And they will not become profitable at an average of £5 per customer, because it won’t provide enough income to cover the net costs of a company like this.
Increasing the size of the loan book will help though.
Saying you’re making profit per customer whilst losing £33m a year is the new Enron.
That’s true - but if we look at the progress from significant net loses per customer to a positive marginal contribution per customer, it seems like they’re going in the right direction. I expect that the figures will get better for the reasons folk have mentioned upthread.
Plus (no pun intended) if other revenue streams take off (like packaged accounts) then that’ll go a long way to breaking an overall profit.
They are. I already posted above that I believe they will do well. But, that doesn’t in any way mean the path is risk free.
Loans and packaged accounts are definitely ways they can make money but both are extremely competitive markets, so they aren’t quite as simple as ‘turn them on and profit’. So far Monzo has struggled to offer competitive commercial products. And until they do turn a profit there is always a risk of collapse (even if small).
Strange then that that my other two banks with around 50 million customers combined have made such a hash of it
I’m wondering aloud (because I could look this up / work it out, but it’s Sunday night and I’m tired) but inspired by this…
… how many accounts (or what percentage) of customers would need to have salaries paid in for Monzo to break-even?
Don’t think it’s as simple as that. It depends what they do with the salary. If they ship it off to an external savings account and a different current account then it doesn’t help
This is nonsense. What prevents Monzo from rolling out standard banking products such as mortgages given that Monzo actually is a bank? Have you ever heard about something called economies of scale?
Well, I think the latest report says they lost 47mil in their last year and 30 mil the year before. Going on how that is scaling, I’d take a wild stab at the losing c. 60 mil this year. So that would need around 2mil customers paying salary in.
Obviously loads of complexities we can’t account for here but that’s a rough guide.
Sure, but I think that Tom has said that the average revenue for a salaried account is an order of magnitude greater (something >£30 as @alawrence says).
So it wouldn’t be scientific, or necessarily accurate, but one should be able to look up Monzo’s fixed costs, divide them by the number of accounts, then determine what the salaried/non-salaried divide to break-even would be.
Quick and dirty, but might be instructive?
Because they don’t want to. Monzo isn’t just taking what other banks offer and ticking them off a list. Mortgages will be offered as an integration with another provider. Hub and spoke model
And it would involve an absolutely massive amount of money to offer mortgages themselves
Good point. And what stops Uber from teleporting people from one location to another? After all, they are a transportation company.
I might be tired and it might be Sunday, but I do think that teleportation and Uber are probably off-topic…
I’m off to bed, but every time I see this thread title I see Tom living his best life whilst lip-syncing for his life to this:
Nah, you’re right. It’s off topic. “Rolling out standard banking products like mortgages” is a piece of cake.
A business that some of the larger lenders are getting out of because the price war requires immense scale and significant servicing which Monzo could not meet.
But yeah, just roll it out.
I didn’t say it’s a piece of cake. But I do not see any reason why they cannot do it in this way or with the marketplace model. You just claimed that Monzo doesn’t know how to make money. If you looked at Amazon 20 years ago, would you have said that Amazon didn’t know how to make money as well in its startup phase?
That is based on what? I guess just your opinion, because Monzo is opening 3M new accounts a year.
Actually I moved my savings accounts from nationwide to monzo as rates much better
Having better rates than Nationwide doesn’t make Monzo’s rates market leading, though. I wasn’t suggesting that Monzo’s rates were bad, per se, just not market leading.
Agreed. I don’t need international payments. Paym or to pay in cash and if call myself a pretty typical user.