What's it's plan for making money.
As I understood it current (checking) accounts don't really make any money, they're just used as loss leaders to lure in customers.
As I understood it current (checking) accounts don't really make any money, they're just used as loss leaders to lure in customers.
we're currently making money from interest charged on loans that we make to our customers, from interest that the central bank pays us on our deposits, as well as from interchange that we earn when our cards are used. this is what most banks do (except they also make lots of money from fees that we don't have)
there are several other ways we'll make money and we just started experimenting with a few of them. we launched a premium account that charges a monthly fee [1], we operate a savings marketplace in which we earn a commission [2] and we help people switch their bills to a cheaper provider if they are currently overpaying [3]
we release our financial statements every year and new ones are coming out soon. feel free to have a dig then :)
[2] https://monzo.com/features/savings/
[3] https://monzo.com/blog/2019/05/08/switch-energy-supplier-thr...
Are your financial reports a legal requirement or part of a more open business approach.
Anyway its good that you feel you're earning 'enough' money from your current activities.
On another note, I love monzo and do use it, and don't want to offend but I just had a look at the monzo plus offering and it's a bit crap. A different colour card and (later this year, and not specified) interest on your account?
A soft launch is a better idea compared to other companies launching new premium products, like the CityMapper Travel Pass, which is more like an Alpha than anything, and there have been lots of issues from the get-go.
- Partnership/Affiliate revenue by way of their "marketplace" initiatives. They get a cut of recommending services for customers. Recent examples include new utility (electricity) providers. [2] Also interest/savings accounts. [3]
- Monzo Plus - "premium" banking features such as virtual cards, metal cards, access to a curated "cheaper" market place [4]
- Monzo Business - business banking, initially focused on small - medium sized business with invoicing, payment and tax management built in [5]
- core lending as other customers have pointed out
[1]: https://monzo.com/annual-report/2018/ [2]: https://monzo.com/blog/2017/09/21/testing-energy-partnership... https://monzo.com/blog/2017/11/16/monzo-marketplace/ [3]: https://monzo.com/blog/2018/11/01/savings-pots/ https://monzo.com/blog/2019/05/02/shawbrook-savings-pots/ [4]: https://monzo.com/plus/ [5]: https://monzo.com/business/ https://monzo.com/blog/2019/06/24/business-banking-update/
Additionally new regulations are coming in (in the UK) banning you from charging a daily overdraft charge [1], torpedoing it's one source of income, which doesn't jive with it's doubling in value in less than a year.
Monzo has never had fixed overdraft fees, and can still charge a daily % interest rate as usual
Overdraft fees are also not their "one source of income"
"A 50p charge every day your account is overdrawn by more than £20, up to a maximum charge of £15.50 a month. No other fees, that’s it".
That sounds like a 50p a day fixed fee to me.
They can still charge a percentage, but that 50p per day (£15.50/ month)is £186pa on a potentially only £20 overdraft, I don't think they would get away with the equivalent APR.
In the context of the conversation, one current source of income was offered, so I think its reasonable at that point to label it their one source of income, other sources have been mentioned elsewhere on the thread though.
I was thinking of Starling's overdraft (similar UK bank) which is 15% APR with no fixed fee
> Stopping banks and building societies from charging higher prices for unarranged overdrafts than for arranged overdrafts.
> Banning fixed fees for borrowing through an overdraft – calling an end to fixed daily or monthly charges, and fees for having an overdraft facility.
> Requiring banks and building societies to price overdrafts by a simple annual interest rate.
Retail banking whilst profitable (if done right) isn't wildly profitable, so the only way to rapidly ramp overall profits is to expand the customer base very rapidly, which is difficult as each new market you enter has different regulatory setups which require time/money to adapt to.
Also customers (even in countries with good bank transfer laws) are not that mobile in their banking requirements (in many cases), so growing quickly enough can be tricky.
There are tons of product they can come up with, like insurance, mortgage etc. So making money won’t be a problem with this growth rate I believe.
Monzo also have more customers than banks like Metro, which was older and more invested than Monzo at the time.
So are they planning on launching (their own) savings, or insurance?
Monzo offers the current account and works with other organisations to offer the savings accounts (with the same UX, in the app, just as if it were a native pot). If the ISA didn't have "provided by OakNorth" in small text next to it, the customer wouldn't know any different.
Incorrect.
>overdrafts in the UK are being restricted so be much less profitable
Incorrect, the fees are being regulated to ensure they're reasonable and customers are not being taken advantage of. There is still room to make a profit (and as the article says, they are per customer).
>I believe one of its sell points is no commission on foreign currency
I mentioned commission in relation to the marketplace concept, I am unsure why you are discussing foreign currency, it's irrelevant to the point I made.
>So are they planning on launching (their own) savings, or insurance?
They already offer savings accounts via multiple partner organisations. Unsure why you have such a fixation on bringing this entirely in house -- the bank still profits from customers using these partnered services.
Since the beginning the company has been pretty transparent and clear in that the idea is to build the best current account and make use of other providers as appropriate.
A bank takes in deposits then lends them out, when trying to understand a bank it makes sense to talk about them in those terms, because if it isn't doing those things, it is really a bank.
Monzo are currently charging 50p/day £15.50/m, £186.00pa on a £20 overdraft they seem unlikely to get away with charging the same level apr, which in turn will mean less profit.
I mean if you're not criminal/greedy/irresponsible.
Regulators weren't exactly breaking down their doors pre crash. I don't believe anything criminal was found at Northern Rock (not sure about Lehman). Yes they probably were greedy and irresponsible, but then so was everyone else.