How we got customers to sign up to Monzo in the early years
tomblomfield.com
tomblomfield.com
Is it odd that the author, along with the rest of the founders, came from Starling Bank[1], a UK digital bank founded in 2014, and yet Starling Bank isn't mentioned?
Slightly less obvious, but still important, is the UK's first internet bank, Egg, was founded in 1998! [2]
[1] https://en.wikipedia.org/wiki/Monzo [2] https://en.wikipedia.org/wiki/Egg_Banking
Anne Boden’s book is worth reading if your interested in the early history of digital first banks in the UK
I started off getting Monzo when it advertised itself as a pre-paid debit card and it's big selling point was free foreign ATM transactions. I never actually used it all that much (I've been with them about 5-6 years, and maybe done about £1000 total foreign withdrawals).
At some point when they introduced limits, there was a post on their forum comparing them to Starling, Revolut and N26 and others. N26 was a bit of a hassle, but I got the other two just in case I needed more than the £200 a month you were now allowed.
Since then, the service at Monzo has steadily declined, as they decide to start charging fees for this that or the other than used to be free, adding more and more junk dressed up to look pretty, but every month or so the service gets degraded a little more somehow. An extra charge here. A restriction there. More in-app advertising for services I don't want, etc.
And yet throughout that, Starling has continued to do everything you'd expect from a bank, and with the convenience of an online bank. Their app hasn't really changed at all in that time, and yet somehow it's still better than Monzo's. Simpler, sure, but certainly less annoying.
It's telling that I've never felt comfortable trusting Monzo with my salary, because it always feels like it'll fold any moment, so I've always had my salary paid into a "real bank" and just have a standing order each month to transfer £500 a month for monthly expenditure, but pay most bills directly from the old brick and mortar bank. I needed to keep that old account around anyway, because Monzo makes life impossible if you need occasionally to use cheques.
And so, when I started a company and needed to choose a bank for my business account, it was a no brainer - Starling.
Can you elaborate more on this, the fold part?
>> from the old brick and mortar bank
Which such bank/s you recommend?
PS: I have been in UK for quite a few years now and only use Monzo.
Edit: typo and query
That said I'd be surprised to see a bank like Monzo just fold without warning. It's possible that one or more of the "challenger" banks won't last a long time, but the outcome there will most likely be them getting bought by someone else.
In which case you will be protected up to £85,000 by the FSCS.
and don't mind being without your money for some time
(personally I wouldn't have my salary paid into a bank that's losing ever increasing sums of money)
I'm guessing you would just open up another account.
But I understand if you wouldn't want to be without your current account to pay bills etc.
Sadly, in my opinion the company took on too much investment and was now bound to deliver tech-company returns with a product that fundamentally isn't compatible with them. This led them to become yet another bullshit "growth & engagement" operation and ultimately killed the appeal of the product, all while competitors such as Starling Bank stepped up their game and delivered a very similar product that is not only profitable but doesn't have those "growth & engagement" vibes because they didn't have the same pressure and could afford to take things slow.
I don't know what really went on, but Starling's side was reported in the UK press: https://www.thetimes.co.uk/article/starling-bank-boss-anne-b...
[1] https://podcasts.apple.com/dk/podcast/e86-monzo-ceo-on-death...
[2] https://podcasts.apple.com/us/podcast/e107-starling-bank-bui...
While trying to understand why, I thought it was probably because there was too much PR and fuzz around Monzo as an "ethical business" and little action. You don't just talk about being ethical or caring about the customers (most data collection companies say "we value your privacy"). You prove it by doing, by delivering an amazing product and customer support, and by showing how you are going to turn profitable. Revolut and other competitors talk less but you can see they are doing reasonable job on all fronts.
Revolut allowed people to open accounts immediately with no (or very soft) KYC but then had to limit (by law) the amount of money they could transact before passing stronger KYC. This led to a lot of people opening Revolut accounts, going abroad and ending up stranded with no access to their money once they've exhausted the initial limit, sometimes with no way to complete KYC at all if they didn't have the required documents on hand.
The ethical approach here would've been to prevent these people from opening accounts without initial full KYC or have strong & persistent warnings about the issue to dissuade people from going abroad with a limited account, but who cares about people being stranded if you can have "growth" instead?
In banking, boring is better
Exactly, you don't want to hand your money to a fancy organization that experiments with its PR and god knows what it does behind the scenes.
Never heard about the scandals though, do you have any links?
Monzo have kept theirs clean l, focus and and useful.
> Unfortunately we can't offer you a Monzo account
> We're afraid we can't go into more detail about why we can't offer you an account.
> We assess every application using details you've given us, and any information we get from the credit reference agencies we use (Experian and TrnsUnion) or from anti-fraud services like Cifas.
Starling is the same. As a debt-free UK resident without any UK driver's licenses, utility bills, benefit claims, gun certificates, electoral register or GP records, the only bank that is willing to do business with me is Revolut.
Not having any credit history is becoming a barrier to access more and more services that require an identity check. While it is understandable that companies want to protect themselves from fraud, this trend is making it difficult for people who don't have a credit history to access basic services. This is creating a significant barrier for certain groups of people, and it is something that should be addressed. When it comes to providing essential services to those who fall through the cracks, Revolut may be more ethical than the other options.
For people without a good credit history in the UK there is meant to be "basic bank accounts" which don't require credit checking as they don't offer overdrafts (https://www.moneyhelper.org.uk/en/everyday-money/banking/bas...)
That said, you will still need proof of identity/address. If a bank is taking you on without those, I'd struggle to see how it's meeting KYC (Know your customer) requirements.
His best bet is to open an account at a brick & mortar bank which will be able to verify his identity using physical documents and not only skip the CRA check, but actually create a CRA record (which can be a good or bad thing depending on your opinions regarding privacy). After a year or so, he should become eligible for those accounts accounts (if the lack of CRA record is truly what caused them to reject initially) and even qualify for a credit card if needed.
Last year, I stuffed every document I owned into a folder and went to a brick & mortar bank to open an account. No dice. The customer adviser went through some kind of a decision tree and told me that my best bet is to apply for benefits if I am eligible, saying that I just need to show them some letter without claiming the benefit. It is absurd. If wearing an ankle tag for a month to prove my address was an option, I'd go with that.
Technically it doesn't - banks leak your details to CRAs upon every major interaction (account application, etc) and regularly confirm them if they have a continued relationship with you (if you have an account open they'll typically report the status of the account every month).
However other banks may still be suspicious of a brand new record and might want to wait a few months before trusting it (since if the record was created fraudulently, it will usually get discovered and rectified pretty early - if the record is there for a long time, either it's legit or the fraudster has done an above-average job). The "one year" number is purely arbitrary but feels fair to me, that's probably what I'd do if I was building such a system (though I'd also build an escape hatch to allow people to confirm identity differently without CRA scum being involved).
Furthermore, in the UK there is no concept of "credit score". It's a myth perpetuated by the CRAs just so you obsess over that meaningless number that they can tweak every month to give you a reason to keep coming back and look at their "offers". In the UK, lenders get your raw report (aka identity, address history, recent credit applications and their status, open accounts, etc) and then make a decision internally based on their own algorithms.
The page also lists the banks which provide the "basic bank account" service, which scanning down them appear to be primarily traditional ones (although with branch closures in the UK that's getting less like bricks and mortar by the year.)
That's because Revolut isn't a UK bank. Until very recently (less than a year ago), it wasn't a bank at all anywhere. Unlike Monzo, Starling et al. (which are UK banks) Revolut is an "electronic money institution" and hence your balance isn't protected by the Financial Services Compensation Scheme (FSCS).
> Money at risk
> Reason why
> Revolut Ltd is an e-money institution. FSCS can't provide protection if an e-money institution fails.
Money in Revolut savings accounts ("vaults"?) is apparently protected as that money is held with real banks, not Revolut Ltd.
Agreed. My husband and I are against debt on principle and it really irritates me that credit history is being used for identity checks. I accept the trade off that a lack of credit history would make it more difficult for me to get credit in the future, but it should not affect my access to non-debt-related services.
We’ve already encountered this problem once [0] and I’m concerned that it will become even more of an issue going forward.
[0] My husband was not able to create an online account with the social security administration because their identity system didn’t have enough info on him to even attempt to verify his identity. He couldn’t even go in person to set it up because the local office was closed due to COVID.
I also ended up using starling instead - perfect really.
While I like the Monzo travel bits when travelling I find bank accounts much of a muchness really for my basic needs so don't have any real loyalty.
I did try an open a Starling account once but they claimed my phone number was already linked to an existing account, which I found strange and wasn't prepared to jump through the hoops required to prove otherwise.
Also I kind of despise the idea that you have to have an app to access the account.
After trying these "challenger" banks I am staying with my good old High Street bank where I can access my account from the web and it does not have any confusing bells and whistles.
https://monzo.com/blog/2018/06/13/how-to-get-online-in-an-em...
A quote from [1]:
> When money comes into play it switches us from ‘social mode’ to ‘business transaction mode’. We become more selfish, distant, less helpful, and less willing to be helped.
You don't even need research to back this, it seems obvious when you think about it.
Edit: I've just checked the description in the Play Store and it says 'Open a full UK bank account'. Maybe that is new, but it is pretty clear.
I myself went through their interview process not long ago and to say it lived up to the sentiment of the glassdoor reviews is putting it mildly. Several rounds, silly armchair-psychologist behavioral questions, and the interviewers made it blatant that they didn't want to be there. Did my last interview at 4pm one day, got rejected by 8am next business day. I've gotten offers from Google, Amazon, etc so I know I interview well, not sure what happened there but really got the vibe that their employees are never quite sure if they're doing well, and management likes it that way.
They're a bank struggling to market themselves as a tech company.
Edit: to clarify, I didn't actually end up interviewing at Monzo because the recruiter said no pretty much right away on hearing my salary ask.
You do cool work, btw. Just be careful, Shopify seems to be real layoff happy. I've even had some of your staff engineers hmu on Linkedin for a position and I've been having to say thanks but no thanks.
As a cash slave, it makes it very easy to send to UK-based cash masters from outside the UK.
- Packaged account fees (Monzo Plus, Premium and business Pro)
- Lending (Overdrafts, Personal Loans, Credit Card)
- Interest on bank deposits
Cash withdrawal in pounds in the UK: First £250 in a rolling 30-day period free, 3% after that
Cash deposit: £1 per deposit to pay in cash at any PayPoint
At least £500 was paid into a Monzo account in your name over the last rolling 35-day period, and you have at least one active Direct Debit on the same account in the same period.
You’ve received a Department of Work and Pensions or a Department for Communities’ payment into a Monzo account in your name over the last rolling 35-day period.
You’ve received a student loan payment into a Monzo account in your name over the last rolling 8-month period.
You’re sharing a Monzo Joint Account with someone who has done at least one of the above.
if you lose your job, you're now being charged 3% to pull your own money out
(and regardless: they still charge you to deposit your own money, unheard of for retail customers)
They'll likely cover costs in the long term, and their business banking will probably do fine, but I suspect the valuations aren't justified. The main way that the major players make money is through things like mortgages, wealth management for the very wealthy, and through their investment banking arms.
Starling is another startup bank, a main competitor to Monzo. While they're decidedly less "cool", they seem to have targeted business banking much more, and I suspect that's why they're now in a better position. Monzo went big on Monzo Plus and even on its ~3rd? iteration, it seems to have had a lacklustre reception. I'm Monzo user #13, about as onboard with the idea as I could be, and I find it unconvincing.
Monzo have just launched Monzo Flex, an easy payment system like AfterPay/ClearPay/Klarna. I'd normally expect that to do well but it's about 2 years too late and going into a recession is probably not the right time. Hopefully it'll do well as we come out.
It's a shame because this is something that Monzo could've done just as well and there's absolutely a place (well, was - that's now taken by Starling) in the market for it. Natwest still charges extra for a "next-gen" business account that allows multi-user access to a web UI, and I bet it's terrible - this is something a company can Monzo could've built in days based on their existing modern tech at a time where there was nothing like it in the market.
Starling seem to have taken a "slow and steady wins the race" sort of approach, and had a bunch of experienced engineers build a boring old Java app. Nothing special but I'm not surprised that it is working out ok in the long run.
Having seen some presentations about their tech. stack, it seems very clever and has interesting ideas, but I was worried that once the people who designed it had moved on , how maintainable would it be (coming from a banking background where I found that systems lived on for EVAR)
Why is that? Current accounts are a loss-leader for most (all?) legacy banks too, they're used to lure the customer in so they can then pitch revenue-generating products such as credit cards or mortgages.
So I’m always surprised that lending and credit isn’t the core strategy of these banks - there’s very little money to be made in fees…
Mortgages and credit cards are the big ones, and Monzo does neither. However I would like to see a credit card from Monzo.
I think since app dominated baking became a thing a lot more people are paying for premium accounts.
Imho they all offer poor value for money though
I do wonder why the VCs wanted into this market at all
intense competition snuffed out the margins of retail banking 30 years ago
and the "legacy" (read: profitable) banks are more that capable of putting together a shiny looking app