Monzo, a U.K. challenger bank, raises £85M Series E | Hacker News Reader

Monzo, a U.K. challenger bank, raises £85M Series E

techcrunch.com

102 pointssj13178 comments

Monzo is awesome; they deserve all their success. They have single handedly forced banks to compete on UX, though Monzo still wins by a significant margin.

Huge stat from the article;

> And in terms of customer growth, extrapolating stats from a recent Nationwide annual report (PDF link), the challenger bank says it now accounts for 15 percent of all new bank accounts opened each month in the U.K

Is this accurate? 15% of bank accounts opened in the UK each month are for Monzo? That's an insane stat.

No affiliation, just a happy Monzo Beta user.

You can tell they are starting to optimise for revenue rather than user satisfaction, though. They recently prevented you from loading your Monzo card via another debit card.

You mean they recently stopped you using a debit card to pay money into your bank account? Why would you do that? If you want to move money between banks you can do so instantly with faster payments.

I don't say that to be facetious, I think there's a difference of perspective here which is only going to widen if you think they are a prepaid card. They set out to make a bank, and started with prepaid cards, but that was never the end goal, it was just a way to test out the UI before getting a banking license, so expecting people to pay money in as you would to any other bank account makes perfect sense. This is not a prepaid card you load up, it's a bank account, and they don't want users to think of it as a prepaid card.

So I think their user satisfaction for people who want a bank account is doing well - as evidenced by their new customer growth. Can't wait to see them launch in the US market as it is also ripe for disruption and I think they have the scale and ambition to do well there.

I think the comment was around reduced usuability. It used to be if you wanted to move money into a Monzo account, you could do in all in-app, via a linked debit card.

This provided a nice usuable way to get money into the account from a "legacy" bank that doesn't have a good mobile story.

Now if you have Monzo + a legacy account (as many do) you have to go log-in to the legacy account to move money to Monzo.

Ofc once you go "full monzo" that's not a problem any more but it's still early days for that and Monzo have had enough service glitches to make people a little nervous of committing to having it as their only account, I think.

Other banks don't offer that (top ups via card), and I don't think it's something you should expect of a bank account - it was always a stop-gap. If you're using it for spending regularly and don't want to switch, just set up a standing order for a bit of money each week/month to try it out. I think as they want to become a bank this is part of that process - their focus needs to be on those who use it as their main account.

Personally I switched almost a year ago (when they introduced CA), and am happy with that choice so far - kept my old bank just in case but haven't needed it. Re outages many banks have had major outages recently, far more than Monzo... They had a few glitches early on (late last year), but I'm fairly confident of their ability to scale now.

It indeed isn't a common feature of bank accounts.

However it is a feature that Monzo had, which was easy to use and they got rid of it (IIRC due to the costs of providing it), which decreased usability, which I think was the original point the poster made...

It didn't decrease usability at all for those who use it as a bank account. It's certainly not a good prepaid card account but there are plenty of those.

True. And that's also the endgoal of Monzo: to be your main bank.

indeed. But Monzo is better than most (all?) banks and this is what people used to top up their cards before they removed the feature.

Wonder if they considered offloading the transaction fees onto users. I'd certainly pay for the convenience and would have continued using Monzo (Barclays copied the card freeze and atm locking so no need for Monzo, esp. with this).

Technically, as a workaround, you can create a monzo.me link and then make payments of up to £100 to yourself.

Nice hack, thanks!

I've been paying my wages in for about a year now.

Its been a flawless experience and I'll never look back.

From a technical perspective I think it could be easy to believe that because they're a startup your money is in someway less safe, or the service less reliable.

But I actually think that because of the sheer technical debt old banks struggle with (they're ticking time bombs on the inside) the opposite might be true.

Speaking as someone who used to top up by debit all the time, a couple of clicks in the app was far easier than switching apps, re-authenticating with my main bank and then making the payment. I don't blame them for doing it - apparently it was costing around £4 million in fees - but it's definitely harmed the UX unless you want to go full Monzo.

Sure, that sounds painful if that is what you were used to. Just out of curiosity, why did you not set up a standing order? If you're using it regularly surely this would work just as well? Seems annoying to have to constantly top it up with small amounts. Was that a commitment too far?

When I was transitioning I did a v. small standing order first for a few months and used it for spending, then upped the amount, then eventually switched over salary, direct debits etc.

For beta user, back when Monzo wasn't yet a bank account, the only to put money on it was to pay by card.

This was a habit that a lot of us had taken, and as described above, it was just easier to do all in one place: - Go check your monzo app - Notice you're low on fund - Top up using your card

A lot of us haven't switched completely, because why would you when other current account can give you travel insurance, small % of interest, etc.

> For beta user, back when Monzo wasn't yet a bank account, the only to put money on it was to pay by card.

This is incorrect - it was possible for a long time to top-up via bank transfer. Certainly during beta. It simply required using a shared sort code/account number with a specific numeric reference which tied the payment to your account.

It wasn't as instant as it is now (with Faster Payments), but it was still definitely possible.

I've pretty much stopped using Monzo after they removed the card topups.

I used to use it all the time while traveling, and usually top up on the spot when the funds on the account run out and I needed to pay for something.

Bank transfers really doesn't work for that use case.

Now I'm using Revolut for the same purpose (they still allow card top ups), not much difference to Monzo although I really, really like Monzo customer support.

If you liked it, I'd really recommend the built in current account transfer service.

I like it but not enough to change my current account

I already have a bank account I'm happy with. I specifically got the Monzo card as a prepaid card to use when spending abroad, which is what they originally sold as one of their key benefits.

to answer your question, you used to be able to "top up" your Monzo card directly from the app. It was really quick if you needed more money on the card. As someone else commented elsewhere, most people use it to pay for things, but still use another more ancestral bank to get their paycheck.

Now you need to go in your bank's app, log-in there, go through many menus (because banks which are not Monzo or Revolut have no clue about UX) in order to send money to your Monzo card.

It's still free, and instantaneous. It's just more cumbersome now.

They also removed the "no fee withdrawals abroad" and now you pay a pretty substantial fee (3%) above 200GBP per month. I might be wrong on these numbers but this is what I remember.

Sorry, that probably wasn't clear. I was trying to say this was a deliberate choice as they want to be a bank, not a prepaid card.

If they are your bank you don't need to add money periodically with a card.

The fee for withdrawals abroad is unfortunate but perhaps they'll be able to up the limit sometime.

oh yeah definitely, I got used to toping up via Lloyd's app and I'm fully supporting Monzo to grow.

> You mean they recently stopped you using a debit card to pay money into your bank account? Why would you do that?

That's the only way to get money into a Revolut account. That, Apple Pay or a SWIFT transfer which costs a fortune.

This was costing them millions of pounds a year in fees. Quite a pricey tactic to remove friction of funds flowing in and totally reasonable for them not to sustain it while pre/early revenue.

Edit: Bank transfers are instant in most cases and don’t cost Monzo. So we should do our part to help them if we want something better.

Bank transfers are pretty painful, especially when you need the top-up right away. I would happily pay for the card transaction for the convenience, if it's an unsustainable cost for them.

No, a better future is ahead of us: Monzo as your main bank. So let's pay this little friction price in order to get this better future.

One thing that bothered me more was the fee for withdraw abroads.

Revenue vs user satisfaction isn't entirely a binary choice though. If Monzo offer a feature which costs them a lot but offers user's some convenience, it's a bit of a balancing act to figure out what the convenience is actually worth. Debit card top-ups were costing Monzo millions per year, and seems to me to be only marginally more convenient than a bank transfer.

Debit card payment into a bank account is kind of an odd feature anyway, it seems like a bit of a relic from back when Monzo weren't a fully-fledged bank, and were just offering a prepaid card.

I imagine they are moving away from pre-paid cards, and towards full accounts. The pre-paid cards were just there to get them off the ground, and isn't their main focus anymore.

They recently released a savings "pot" (how they split up money) with interest (1%, provided by another company). Which is a step towards offerings of other banks, and in my book is a step towards user satisfaction.

Moved away - they shut down all the pre-paid cards earlier this year

https://monzo.com/blog/2018/01/18/future-of-prepaid/

Edit: More relevant link: https://monzo.com/blog/2018/04/04/ending-prepaid/

I was Monzo Beta user, but switched to Revolut. Much more features.

I've got Monzo but am more using Transferwise. I prefer web based to app and they have some other advantages.

My friction with Transferwise (as a debit card beta user) is that you can't set up a standing order to fund it. You have to go into Transferwise, say how much you're transferring, then do the transfer (by logging into your banking app if you want a free transfer).

I'm using it for overseas expenses, but the time taken to fund it and keep an eye on it is outweighing the savings made using it.

If you have an iPhone and a debit account linked to Apple Pay, it's as simple as using your thumbprint to authorize a transfer. The fees are minimal and the money, converted at close to the market rate, sans a tiny fee, shows up in your account in less than an hour. really a revolutionary system when you compare it to opaque wire and bank transfers that I had to use 3-4 years ago when last traveling abroad

My card is now a full UK bank account and you can set up standing orders to pay into it in the normal manner. Unusually the account is multi currency and you can have linked accounts in like 23 currencies - I now have an Australian account number and sort code so aussies can make normal domestic transfers or standing orders to that in AUD. I'm not sure of any other banks that do that. Certainly not the regular banks, and my Interactive Brokers account is multi currency but AUD would go to the IB account for further credit to me rather than me having my own regular Australian account.

In fact if you want say a US bank account and don't live there Transferwise may be the easiest way to have one.

One small point to watch there is that AFAIK Revolut does not have a banking license so they're not covered by the FCA deposit protection scheme.

Not a worry unless they go bust of course, but one to be aware of ...

They have applied for a banking license, but that was like a year ago and haven't heard anything much since then.

Yeah it's a wonder why its taking so long. It's a great card to travel with but don't put too much money on it for this reason.

Within the echo chamber of my friends in London most now have a Monzo account. I would say 60% use Monzo. 20% perhaps use similar banks Revolut or Starling (though for some it is because they work for them). And perhaps 20ish% still haven't switched but all seem keen to.

Granted this is a very niche tech-savvy group of people between 20 and 40, but the established banks must be starting to feel the effects?

Most have a regular bank as their main account but like me hardly use it anymore, and some probably closed them altogether.

Though I am feeling more resistance from family and my non tech friends. But I think with time they will also try it and be converted.

I'm in the same demographic, same kinda of social group, and most of the people I know who use monzo still don't use it as the account where they store the bulk of their cash, it is more for travelling than anything else. The free (up to £200) withdrawals and inter-bank exchange rate make it a no-brainer for that, but there's still nothing about it which would make me switch away from a current account with a decent interest rate and added extras like insurance, or cashback on bills.

What UK current account do you have with a decent interest rate? By decent do you mean 0.02% or something?

Why do you care about interest on a current account? How much are you going to keep in there anyway?

Depends on individual and outgoing mine has 2-4k I am not aggressively filling my ISA's at the moment so it might as well sit there.

So even at an astronomical interest rate of something like 3% that's still not even really worth more than half an hour of time shopping around to get a better rate.

Well I am derisking and taking money out of my PtP other wise I could get 4% with zopa

I keep 3 months pay as emergency cash on hand in that account.

I think Starling is 2%.

Starling is 0.5% for balances up to £2000, and 0.25% for balances up to £85000

I use santander, which has 1.5% interest (not amazing, but better than nothing) + 3% cashback on phone and internet bills, 2% on utilities and 1% on council tax / mortgages, which adds up to significantly more than the interest over the course of a year.

> switch away from a current account with a decent interest rate and added extras like insurance, or cashback on bills

what. First, there are no offers with decent interest rates out there. Second, Revolut has insurance. Third, Monzo is so awesome that most people just use it even though it's a debit card.

you can easily get 3-5% on a current account if you shop around a bit, and are willing to put up with switching once a year (a bit much for me, but some folk will go to the effort for the sake of a couple hundred quid).

when I say insurance, I mean, for instance, when I had a halifax current account, they threw in AA coverage, and mobile phone insurance as part of having a current account with them. I'm not aware of any challenger bank that has extras like that.

I'm a millennial working in tech in the UK and I've never heard of it! I'll have to take a look. It'll probably turn up here in the North in three years like most new things.

They have done several events in Manchester already

Why they seem to offer less than Santander 123 does to me.

Everybody I know in the UK uses Monzo.

Monzo is even a verb as in "can I Monzo you?" or "let's split with Monzo"

It's just that freaking awesome.

Really? I live in the UK (London) and had never even heard of it.

This is starting to feel a bit like China Mieville's The City & the City, two worlds inhabiting the same space but never interacting...

Well, to be fair London is freaking huge. Depending where you live in London you mileage might vary. But now that you know about the "orange card" you might be able to notice it around you.

There are ads on the tube now so it's harder to not notice today. Before it was just the hot coral card that was advertising it and easy to notice, especially so when you have one. I remember last year when it was cool and special to see others use it, now it's just par for the course here in London.

I've never heard of it until reading this article!

Maybe I'm not the target demographic or something. Or is it only marketed in London?

Yeah, it's definitely achieved "verb" status in my social groups. Transferring between other monzo users is so incredibly quick and easy. Even people who aren't in your contacts list, with the bluetooth transfer feature. It's great.

I don't understand debit culture in the UK

I'm an American who has a Monzo card and has spent a fair amount of time in London. Why don't people use credit cards???? The rewards are usually pretty good and as long as you pay off your balance every month, you're getting ~3% of your purchases back in rewards/credit

I stopped using Monzo because there are no rewards! Sure it gives me notifications and is easier to see my balance/add money than my Barclays account, but what is the point of the good UX/UI? Is it for fraud detection and making sure the merchants/bank aren't cheating you?

I ended up going back to using my oyster card/barclays card when contactless was the only option, and credit for everything else. Transferwise was also a godsend for converting money with clear visibility into the exchange rate/no fees

I agree that Monzo has been a great catalyst for UK banks to get their shit together on mobile apps etc. but there is nothing fundamentally different about their business...they're a debit-only bank with no physical presence and a nice app - and why don't more people use credit cards instead? Is it because it makes P2P transfers easier than the archaic bank transfers?

I'll try to provide an answer, as I'm European but moved to the US. We don't have this "you're in debt" culture that I think you create when you start school in the US. Very early you have to take a loan in order to study, which facilitate the idea of owing banks.

I opened a secured card here in the US, but I never use it, because it just feels weird to "owe" the bank money and not to be able to pay it back as fast as I can. I usually have to wait for the end of the month, and if I mess something up then I have to pay huge fines (that you cutely call APR).

The more you get into this system, the more you seem to collect credit cards. I have friends with dozens of them. What happens if you lose one? Or if you get your wallet stolen? Or if you forget that after the first year you start paying fees on it? etc.

Most of us can live without the rewards if we get other benefits. For example with Monzo, you get added security, you can use it all over the world for free, you can send money to your friends or split the bill easily, you can track your finance, set limits on your budgets, see what was that 30$ you spent a month ago and where it was, round up your purchases to save money, etc. There's just so much benefits that you end up using it all the time as your default card. That's how they get you I guess. But it's so much more practical and easy to use that people have fell in love with their branding as well.

"people have fell in love with their branding as well"

This is what I struggle with understanding. Maybe it's because I'm from a "slightly" older generation. But I've watched my younger colleagues one after another get Mondo(Monzo) cards and I've quizzed them on why they switched. The answers came in two categories a) because it has an app and b) dunno? because everyone else has one. So...I'm still stumped for a good reason to switch.

But kudos to the company behind this because I do appreciate the fact that it seems to have been a kick up the backside of ye olde guard.

Getting a card is free and simple, I suggest trying it and closing your account (which is easy as well) if you don't like it.

> We don't have this "you're in debt" culture that I think you create when you start school in the US.

I think an entire generation of students in England and Wales who now are paying up to £9000 per year of study would likely disagree with this.

While this is still less than many US examples, it's still a ton of debt for the average UK student who is unlucky enough to have an English or Welsh postcode (Scotland continues to offer free higher education). Especially so when you consider average graduate salaries in the UK.

The big difference here is that student loan repayments are based entirely on your future earnings. It is, for all intents and purposes, a graduate tax. The majority of people will not pay off their loan before it is forgiven, and many will never pay anything at all.

Student loans in the UK aren't real debt, though. It's more of a defined-contribution graduate tax with repayments contingent on earnings.

It's not debt.

American Finance loves debt because thats the most powerful instrument they have in business of wealth creation out of thin Air.

i.e Government Issues some Bonds -> Bank buys the bonds with bonds at interest, Federal Reserve print more green paper using the instrument of debt and we all(world) stupidly buy American green paper(Dollar) thinking it has value.

Few cycles, a economic crisis and a purge later they print more notes and cycle continues.

I'm from the UK and I use my credit card for 99% of my discretionary spending, mainly for the perks, but also section 75.

So the features in these challenger banks are largely useless to me, and I track all my finances elsewhere anyway

However, you can't put everything on a credit card in the UK, like household bills and rent, so you still need a current account for this. I use my Starling account for this and it works fine.

Some people don't have financial discipline so I'd imagine the credit card might lead to temptation, so they stick with a debit card to know exactly what's going on.

I find Curve to be more innovative because it is a debit card that links back to any debit or credit card. You can only carry one card, use your real credit cards in places that only accept debit. Plus - a fancy app and real time tracking for all your old bank cards. It's most of the upside from Monzo with your choice of cards.

> The rewards are usually pretty good and as long as you pay off your balance every month, you're getting ~3% of your purchases back in rewards/credit

So far as I’ve seen, most credit cards issued in Europe don’t have huge rewards like that because card networks are capped in how much they can charge merchants for card processing. Add into that a penchant for not acquiring open-ended (revolving) debt, and there you go.

Remember that those rewards in the States are paid for by relatively high processing fees charged to merchants (2.5% plus a flat fee of around a quarter) and the interest paid by people who carry balances. And that interest rate is regularly in the low to mid 20% annual rate range.

> So far as I’ve seen, most credit cards issued in Europe don’t have huge rewards like that

They do in the UK, which this article is about.

I have the best of both worlds here where all of my amex credit bills come out from my Monzo account and my salary is paid into my Monzo. The other features of the bank are what appeal to me personally, the fact that the UI is so much nicer to use than most other banks, as well as they are pretty progressive in terms of features. I can see when my credit card bills will come out (it warns you a few days prior with an estimated amount of the bill), and I can see rundowns of my spending, etc.

How does that work? Do you still get the purchases listed in Monzo somehow or do you mean you only pay the negative balance of the Amex card?

I’ve always found this bizarre as well. The amount of air miles/cash back/whatever my U.K. relatives leave unclaimed by purchasing everything on debit cards is nuts to me, not to mention the extra sales dispute options a credit card provides, often free insurance for rental cars etc.

The “Europeans are debt adverse” argument doesn’t really make sense to me either - if you clear your credit card balance each month this is in practice much the same to you as having purchased the same goods on your debit card, just minus many kinds of rewards or benefits.

The amount of money I receive in cashback via credit cards largely dwarfs any kind of interest I make on the cash in my household spending current account.

I don't use a credit card. I'm also 100% debt free. I don't purchase anything I can't afford up front. I'm also British.

I don't agree with the "rewards", which seem like a massive scam, which rips off everyone though higher prices irrespective of whether they pay by credit card or not, and I refuse to be a part in that. I likewise refuse to bother with any other dodgy scheme like mail-in rebates. Charge me a fair price up front, and I'll pay it in full, there and then. No silly financial games.

Good on them. It's an outstanding product and they are iterating very quickly on it. The app UX is starting to feel like it's bursting at the seams - they've added in loans, and overdrafts, and savings pots, and international transfers and no doubt more is to come.

I hope they take the time now to streamline their UX. A mobile-first bank is an outstanding idea and Monzo have been the best to execute on it, but avoiding bloat and maintaining speed and simplicity will be one of their biggest product challenges.

By far my favourite thing about Monzo is that the Android app is FAST. My old fashioned bank's mobile app is so slow and difficult use that I do almost everything with Monzo instead. If their app becomes bloated and slow, I'll be looking for one of the many other mobile first banks to switch to as there is really not much to distinguish them.

> ... maintaining speed ...

Sorry I know this is not the point of your comment, but I couldn't let this go: the Monzo app is by far the slowest app on my phone. Until their more recent updates it was nearly unusable on an iPhone SE. Still has >1sec response times on almost any touch event. (comments on the forum suggest this is because they use O(N) algorithms somewhere, and after 2y worth of events the app slows to a crawl. doesn't inspire confidence, to be honest.)

To the point that I focus on putting as many spends as possible on another card that has a better app, just so I can avoid spending any time in Monzo.

To end on a positive note: their support is so much better than the competition it isn't even funny. Apparently they are the only bank with a "brain required" policy for CS.

Apparently their Android app has better performance and they're working to fix this on iOS:

https://monzo.com/blog/2018/09/18/ios-app-performance/

I just loaded up the android app for the first time after booting. 5 seconds before I could see balance, another 15 seconds before the graph loaded. It used to be fast, but I hardly use it any more because it's slow to check my balance.

I am on Android, and for me it used to be slow, but recently has become very fast again. I just opened the app and it took <=1 second to get to see my balance. I am on a very new phone though (oneplus6), and I don't know enough about how different hardware affects speed.

That said, since I changed some settings to reduce battery/data usage, the notifications for spending often don't turn up for several minutes, where they used to be instant (before being able to put my card back into my wallet).

If you're looking for customer support, I really recommend First Direct, their phone support is completely unreal, 1 ring and you're through to someone that can service any banking need you might have with them, no transfers, no waiting, no fiddly security it works really well!

Their app has come a long way recently too.

I have first direct as well, and it’s a joke. They are stuck in the last century. My 1Password entry for them holds eight security codes for different occasions (phone, bank, “code signing”, whatever weird jargon they came up with now). Who is their target audience , Kim Peek?

They treat me with the same disdain on the phone that any other bank does , for example when they contradict themselves but blame me for it.

Everything is great until you go off script, and the mask falls. Not so with Monzo. At all.

If you want to be treated like a human being by a UK bank, Monzo is your only choice.

Or get rich, I’ve heard that helps. I’m trying that one, and will keep you posted. ;)

We're definitely aware of the iOS performance issues and we're working to fix them. We're frustrated by it too.

1sec response times on almost any touch event. (comments on the forum suggest this is because they use O(N) algorithms somewhere, and after 2y worth of events the app slows to a crawl. doesn't inspire confidence, to be honest.)

This is not my experience on a few different iOS devices over the years - things respond pretty much instantly (iPhone 6 and 8), never seen 1 second waits. There's something wrong with it on your phone (not sure what, and that is an old model), but that is not the experience on a newer phone. I have a few years of transactions in there, was an early user so it's not that either. Perhaps SE particularly suffers though and it's just masked because I have a faster device.

I do hope their friendly support can cope with their growth, I agree it's one of the best bits of the customer experience.

My one complaint, and the thing which forces me to use a competitor instead, is that there's no pin protection on entering the app, which I find quite unbelievable.

Weird. They have fingerprint authentication to access the app on Android but not pin.

It's a configurable setting. For some, I imagine, having to unlock the phone, then the app with the same fingerprint credential seems pointless.

You can certainly turn on Face ID (and thus I assume Touch ID and passcode authentication too).

Personally I love that this is optional; I already authenticate securely with my phone, so it seems weird to mandatorily require an additional authentication step.

Optional is fine, I'm not looking to force anything on anyone else, but as an Android user without a fingerprint reader, there's no option.

Oh right, sorry. I didn’t consider that use case! Definitely seems like that option should be available.

It sucks. Just to provide a bit of background on these kind of decisions: usually it's quite hard to support a plenitude of platforms, so what happens is that you end up supporting the most recent ones first: the ones that have strong authentication baked into the OS.

I can speak from experience about user perception of security, having previously run security product for a major UK fintech (which works with Monzo). A large proportion of users would complain that biometrics and/or PIN was not mandatory when opening the app. Many people share devices, especially iPads, or have family members that know their device passcode (or have a registered fingerprint or face).

Making it mandatory (or strongly pushing it) greatly increases the level of trust people have in your company. The data suggests it is a worthwhile convenience trade-off.

Totally agree on the app UI front - I'm hoping they live up to their promise of being a hub for lots of types of accounts, but that requires a substantial rethink of their UI, which is still very focussed on one primary account with 'pots' (accounts without an exposed account no), and as you say has many new features tacked on. The UI is not bad IMO, but it'd be nice to see it streamlined a bit. To be fair they have done a bit of that (the payments screen has been improving).

Another ad for the YC school of doing these things

> ...I’m a follower of Paul Graham and the YC camp of startup wisdom... http://tomblomfield.com/day/2015/12/13

From the CEO/co founder, GoCardless (YC S11) alum

I haven't used Monzo, but I have now fully switched to Starling, which seems extremely similar - it's part of the new banking avant-garde in the UK and a significant step forward compared to traditional banking.

After 5 years with a Natwest account, I would never go back. I find it incredible that it still takes traditional banks 2-3 days to update my statement with my latest transactions. I'd have scares regularly because I'd have 300 pounds disappear from my account and I wouldn't know why for a few days.

Another example is changing my address - it literally took less than a minute with Starling, all from my mobile app. With Natwest I had to physically walk to a branch, wait in a queue, talk to someone - in total, probably more than an hour lost.

Yet another example - it takes about a week to open a business bank account with Natwest. It took 5 minutes with Starling, all from home.

If anyone has any second thoughts about switching to something like Starling, then just open an account. It's about as painless as you can imagine - you download the app, apply for it with a 10 second video and then a card gets mailed to your address. I can't believe I didn't do it sooner.

> Another example is changing my address - it literally took less than a minute with Starling, all from my mobile app.

Sounds like a feature ripe for abuse and identity theft.

How?

If whatever API that mobile app uses were compromised, the attacker could easily update the address and then make changes to a user's account without the user receiving notifications to realize the problem.

Not sure I understand - you don't receive notifications by post anyway? Why not just attack the 'transfer money' API instead of the address change one...

In theory, yes. I have thought about this as well.

At the same time, you need (a) the device where the account has already been set up and (b) the master password. I'm not exactly sure what an attacker might be able to do by changing the address, since by having both (a) and (b), he would already have access to your full account.

Do any of the challenger banks do join accounts yet? Last time I looked Monzo didn't. If they did I'd jump on it immediately.

Monzo recently launched joint accounts. I've set one up and got the cards, but we haven't made the switch quite yet (apparently automated switching isn't possible coming from existing joint accounts, so I need to spend an hour or so updating existing payments).

It's a bit odd the way they handle it, from what I can see you both need your own account then you share a third joint account.

Yes, Monzo and Starling both promote joint accounts on their home pages.

Starling definitely does, and I do have one with my partner. Same as my other comment, it is trivial to sign up and a pleasure to use. Before Starling, we did want to create a joint account with TSB, so we set up an appointment at a branch, but it got cancelled 2 hours before it was supposed to happen.

Starling is great, I used them for my first business account. However, I've since moved elsewhere because 1) no webapp, and 2) no Xero integration. I need one or the other to operate properly, downloading and uploading CSVs gets tiring fast.

What are you using now for business banking? I would like 1) and 2) also.

Santander. Absolutely painful to open the account (took a month and two in-person meetings just to get a business account with a credit card), but Xero integration works fine and the website and mobile app are tolerable (if very 2008-looking).

If it's of any use to you, they did announce that they will integrate soon with Xero and FreeAgent. https://twitter.com/starlingbank/status/999915241843511297?l... (you need to scroll down a bit for the Xero reference)

Yeah I know, which is why I kept the account open in standby.

Another upvote for Starling here.

I wasn't too impressed withthe other 'challenger' banks, but maybe I'm just too old for their target demographic.

The Monzo founding team all used to work for Starling. They all got fired on the same day, and now run a better bank.

source?

I was under the impression they all quit on the same day?

I've been trying to close a french bank account for years. I haven't been able to do it because I need to do everything either by going to my specific attributed branch, or I need to send them expensive letters that are every time rejected because I'm missing something. So I keep paying a monthly fee of a dozen bucks...

I was sceptical at first, but I've gone "full Monzo" recently, because the experience of using this as a bank account is just that much better. Things like an actual usable app, instant notifications, proper direct debit management… the experience is an order of magnitude better than the mainstream bank accounts I've had.

I get the impression that the current account offering is now stable-ish, so we should expect to see other financial services being rolled out so that they can start making some serious revenue. And if it doesn't work out, at least it will have been part of the movement that is forcing older UK banks to improve their offerings.

I like Monzo, and indeed I'm a customer, but I do wonder how they're going to generate sufficient returns to justify all the money raised.

Retail banking is fundamentally a pretty boring and low margin business, it usually doesn't make the kind of money that VCs expect as returns, without something like a sale to another company (something Monzo have said they don't want)

Clydesdale bank has 38m gbp in assets, and they’re a relatively not-heard-of obscure bank operating in the UK. I think monzo could bring want consumers want globally.

I was preaching it’s virtues here in the US until they disabled international customers; I really look forward to being allowed back on.

At risk of sounding cliche: the banking sector really needs some serious disruption. It has for too long. There’s not a single conventional bank I’d miss if it were replaced with Monzo.

So I think there is insane prospects. It’s thin margins, but without ever bothering with stores and being tech focused, they can hopefully grow fast and spread wide.

Small correction, if you're going via the Wikipedia page Clydesdale has £38B not M in assets :) Interestingly Clydesdale is one of the major old scottish banks and one of three that have the rights to print their own bank notes. Whilst they're not as popular these days as once they were, they're a pretty major operation in Scotland and Glasgow's largest bank.

Global banking is extremely complex due to regulatory concerns. Whilst you may be able to re-use an underlying technology platform, which would have benefits, most of the hard work is in complying with regulations and fitting in with the local market place

I wouldn't disagree at all that the banking industry is in need of disruption (I worked in banks in the UK for ~10 years so have had some exposure to how their system do or do not operate)

what I'm not so sure of is that the kind of returns that can be generated without getting into other areas of banking (e.g. investment) will give the kind of returns VCs expect.

> ...and one of three that have the rights to print their own bank notes.

Wow, I've never heard of this before - who are the others?

Bank of Scotland and the Royal Bank of Scotland, fill out the three scottish issuing banks

It leads to some "interesting" times if you get money out in Scotland and then go somewhere like London, where they're less used to scottish notes. Merchants outside of Scotland, don't have to take them if they don't want to, but many do.

London is actually among the best places to spend Scottish pounds outside Scotland, because they are used to dealing with unsuspecting tourists in many areas.

Anywhere else in middle England, though, you will likely get some angry refusals...

Ah, Scottish banknotes. Clydesdale and both of the banks of Scotland (RBS and HBOS) can print their own banknotes, but they must be backed by sterling on deposit at the Bank of England. A similar arrangement is in place for Northern Bank of Northern Ireland, which produced one of my favourite UK banknotes: https://www.bbc.co.uk/news/uk-northern-ireland-37342948 (Plastic! Portrait format! Space shuttle!)

One of the tiny frictions of British society is seeing whether people outwith Scotland will accept Scottish banknotes.

Isle of Man is the most annoying to receive if you're just visiting, as they're really not accepted in many other places (https://en.wikipedia.org/wiki/Manx_pound)

As an aside - Why do I always think I've spotted another scottish person when I see outwith...

In my experience when an English shop tries to refuse a Scottish banknote a Scottish person will always appear from nowhere to remedy the situation. ;)

Bank of Scotland and Royal Bank of Scotland: https://en.wikipedia.org/wiki/Banknotes_of_Scotland

Like others have said, US is big market. For revenue I think Monzo's plan has been to become a financial hub/broker for anything from consumer loans to mortgages to utilities, without offering the services themselves. If you have enough users that can be quite profitable.

Unless the competition catches up, Monzo is going to conquer the world.

This kind of growth is starting to make me be concerned as a customer - app performance and latency have deteriated over time, and most importantly customer service has also changed. Scaling good customer service for an effectively free product whose revenue currently derives only from overdrafts and very minimal fees from over-use is going to be very challenging for a bank not yet profitable.

Monzo are brilliant.

Prior to the existence of their mobile app, I used cash wherever possible because it didn't require an extra budgeting step (10 quid in my wallet = 10 quid left for today, with a debit card I'd have to write things down or wait ages for online banking to load whenever I did a thing).

Because their app actually updates in real time and doesn't require 50 levels of nonsense 'authentication', I don't need to do that any more.

I do worry about privacy. I'd prefer to have an anonymous digital payment method. We need to step up UX to get to this level of simplicity.

Why is it possible for so many small banks to start and flourish in the UK but not in the US?

This is actually related to a very deliberate initiative from the Bank of England to make becoming a bank easier.

https://www.bankofengland.co.uk/prudential-regulation/new-ba...

They recognized that it was basically impossible to enter the industry at one point and its been stifling competition for a very long time.

After they announced they were removing the ability to top up via debit card I was concerned as much of their utility at the time came from being able to share costs with friends from an isolated account with a lower balance. The app has lower friction for most actions however, so I now use Monzo as a distribution account to send funds to my other bank accounts.

I still don’t use the card itself at all however as they have no cash back, and fwiw the app has started slowing down in recent months. The frame rate consistently drops noticeably below 60fps when scrolling through my transactions, for example.

Depending on what you mean by "share costs", https://monzo.me/ is still a thing.

If it must be you topping up via card and you can't transfer traditionally, Starling stil have the ability and I prefer it/them overall.

I just moved from the UK to the US, and it looks like my options are pretty bad in terms of bank:

* I am not allowed to use Monzo without a UK residence.

* To top up Revolut, I need to pay 3% of fee to Revolut and 3% of fee to Chase. On top of that it is not instantaneous.

I still continue to use my Monzo card here because it's just so practical (and free), but at some point I'm really expecting something similar to disrupt banks in the US.

If you see that orange card in San Francisco, that's probably me ;)

Monzo is already discussing with US regulators as of February this year (there are some news articles around) so it might be Monzo doing that disruption. Despite a number of other UK challenger banks, I feel like none of them really reach Monzo's level of UX/UI so it seems like a harder issue to solve that one would think, so the idea of Monzo becoming popular in the US doesn't seem so far fetched to me.

Check out Charles Schwab. No fees on the bank account or foreign transaction fees. Then it includes a low fee brokerage to invest your money with some of the lowest fee ETFs around.

I've been a happy customer for 5 years.

PS you don't get the same UX or notifications etc. But they have good service. Most people in the US use Venmo for P2P

I actually have a debit card with Schwab but the app is nothing like Monzo unfortunately :(

They have a very interesting idea, more such ideas should find place in commercial banking and finance. I hope they succeed and probably be a formidable competitor to Barklays and Citi of the world. Would definitely love to use this once i move to UK.

If they had a proper banking website and didn't expect you to use an "app" on your phone I might be more interested.

Err, that is what they offer, banking via an app. If that is a problem for you, maybe you aren't their ideal customer.

Why not support an interface on something that's not a phone too? It doesn't sound like supporting a web SPA would be stretching their core competence.

They have an emergency-access version at http://web.monzo.com but they're a mobile app bank.. not really much more than that to say, website wanters aren't the market they're serving

What's the big difference between website wanters and app wanters? Don't most people want to sit down on a chair at a keyboard and large screen if possible?

If you look at most device splits on the web, its predominantly mobile, by a fairly significant margin.

Predominantly mobile is still not 100% mobile.

Great news if you're wanting to open a web-based challenger bank then :)

The UI of the monzo app is actually pretty good on a small screen. I've never felt I need to use a desktop to view it (same for the "traditional bank" app I use too to be honest - going desktop doesn't really add anything since its just a table of numbers really).

The reality is that you never really use the app anyway apart from very occasionally. The "UI" for this bank account is the card itself.

So young relatively poor users or those that do a lot of travelling the free ATM withdrawals is a big plus.

I prefer the traditional physical bank only for security I only do online banking with my secondary bank which I only keep 100 quid in.

Why though? Why insist that their offering only works on the most insecure class of device that people own?

I would have thought that mobile devices are likely to be rather more secure (free from malware) than most Windows PCs.

LOL, whilst I won't necessarily include all Android devices in this, I'd argue that iPhones and better Android setups are likely the Most secure device that most people own.

Traditional PC security is way too complex for non-technical people to manage effectively, so the approach of walled gardens and vendor managed security is the way to go.

Not to say that a technical person can't achieve a better level of security with a PC/Mac, but for non-technical users, it's going to be mobile all the way.

Modern phones are far more secure than the typical computer.

It being an app, downloaded from a moderated app store (albeit not a very well moderated one) rules out an entire class of attacks (phishing), which make up a large portion of online banking attacks.

This alone is probably a decent competitive edge over traditional banks.

There’s a basic web app available, but you have to understand the the whole point of this service is banking by app.

Is this true? As far as I understood they were app only.

I would certainly be more interested if they did have a website. That's the thing that I don't get with these new fintech companies. Most of my banking involves sitting down and looking at a minimum of 2 windows I don't really get how an app only workflow would be tenable for me. I definitely don't understand app only share dealing. Am I expected to check my shares on the morning train? I've tried chip which is part of this fintech wave and is billed as a savings app for loose change, but doesn't pay interest, except via referrals, and the interface is a bot, except it isn't, its just an anthropomorphised menu that makes basic stuff hard, and it has gifs.

web.monzo.com - enter your email and they'll send you a login link. Not sure it'll cover everything you need but might be worth checking out.

This seems bizarrely restrictive. To not be able to use a computer or a device without the specific app seems somewhat foolhardy.

Darn it. I tried to buy in in their 2017 crowdfund at a £30m valuation but it was oversubscribed. Still good luck to them.

Have any of you challenger bank people had Barclays?

I don't quite see what can be done better. There's an app, I can see my personal and company accounts, payments can be done in a few seconds, direct debits as well. There's also a website I can use to do the same stuff. I have had quite a few online banking setups in various countries and I can tell you there are much more cumbersome UIs.

What do I gain from changing to Monzo, Revolut, or the like?

Mobile first experiences. Some banks don't offer all of their services via their mobile app.

Sometimes I'm still required to go to a physical branch, etc.

you can gain from some sweet VC funded fx rates (for now...)

The most frequent use I make of the Barclay's app is to top-up my Monzo card. The Monzo app (and Revolut, but for some reason I use Monzo more than my Revolut) is just better. It is more focussed on my daily use and has a more pleasant interface. It does not do as much as my Barcaly's account but it does the 95% most frequent banking activities a lot easier.

I don't use Monzo but the big benefits tend to be -

- Low or no fee usage abroad - Real time transaction notifications on your phone. - Transactions showing immediately on the account. - Automatic categorising of transactions. I.e you can see what you spent in restaurants, shops, public transport etc. Monzo also let's you set budgets for individual categories. - Automatic saving. I.e. Chip monitors your account and takes moves what it thinks you don't need to a savings account. - Ability to freeze the card in app (if say you lost it).

Anyone want to comment on the disadvantages?

Off the top of my head I know they don't have branches so you can't speak to someone face-to-face like you might with a traditional bank. Is online/telephone support generally good with these challenger banks? Are there any other negatives I should be aware of if I sign up?

If I deposited a large sum of money into my account would I have all the regular protections of a traditional bank or are there additional risks associated with these small challenger banks?

Monzo uses Intercom inside their app for customer support. I far prefer it, because unlike with calling a typical bank it doesn’t demand your full attention. You can just shoot them a message, go off and do something else, and reply in your own time.

Even then, their response rates have been pretty fast.

In terms of financial protection you get the exact same FSCS protection as anywhere else.

Lower fees for more or less everything, better feature velocity, bill splitting, monzo.me links, a CEO I actually trust, supporting a consumer-first company, better payment authentication (their 3D-whatever sends you a tap-tp-authorise notification), instant card freeze/unfreeze if you misplace it

Monzo offer the inter-bank rate when making transactions abroad, calcuated at the time of the transaction. When I use my card abroad, I instantly see the transaction in-app, along with the associated cost in £, with no additional fee applied. On top of that, you can withdraw £200 a month from international ATMs with no extra charge.

There are some credit cards which offer free international transactions, but the rates are almost never as good.

You probably need to try Monzo to understand how good it is. A lot of comments here explain exactly what is awesome about the app.

Barclays on Android doesn't use Google Pay, it's fucking annoying. Their contactless implementation is appauling, frequently doesn't work, I wish they'd just give up and use Google Pay. I'm personally moving everything over to Nationwide, I like their ethics and business structure. :)

The Barclays app is fantastic, and very fully featured, but it’s fundamentally a port of a web banking experience with the UX of a team of UX experts who think they know how iOS apps should work better than Apple.

The Monzo iOS app is a completely mobile first rethink of banking. From the live nature of the balance, to the in-app chat (which works very well). On top of that, they don’t reimplement iOS conventions.

There’s a lot that could be improved about the Monzo iOS app. The whole service lacks features compared to Barclays (but, 450 vs 150k people, obviously), but it is still a step change in mobile banking.

What’s special about Monzo compared to Simple?

They operate in completely different countries so they don't compete.

If only their customer service could match Metro Bank

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