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I just spent 3 months in London, and it's crazy how Monzo seems to have taken the market. Almost everybody seems to be paying with a Monzo card, regardless of a

I just spent 3 months in London, and it's crazy how Monzo seems to have taken the market. Almost everybody seems to be paying with a Monzo card, regardless of age. Asking around, I consistently heard that Monzo's competitors like Revolut are going to be a future case study in scaling before great product/market fit. I don't know how many people have Revolut accounts, but nobody seems to be using their cards in public. Little details really add up. For instance, Revolut didn't have contactless support for a while, which meant people could not use it on the Tube. Monzo made their cards pink, which creates a physical network effect. The US seems to have a wave of startups trying to reinvent checking accounts right now. I wonder which, if any, will take the market: - Varo (https://varomoney.com https://varomoney.com) - Product and brand don't look very polished and they haven't launched Android support, but they are doing the "hard thing" of getting a bank charter (rather than having a partner bank, like all of the others). - Robinhood (https://robinhood.com https://robinhood.com) - Already offers investment products, so they can get a lot of users quickly. Unclear how good the product will be. (For example - can they support contactless payments with a clear card?) - Chime (https://chimebank.com https://chimebank.com) - Seems to have the most mature and polished product. The killer feature they advertise is "get direct deposits faster", which doesn't seem world-changing to me. My benchmark is Charles Schwab Bank, which offers no fees on any ATM, anywhere. It's what many millennials that I know use. But, it's a bad product and not very user-friendly. Simple tried to reinvent banking, but they never seemed to go beyond polishing the UI. I'm curious to see what the future holds, particularly as some foreign banks expand to the USA!

zymhan 8y ago
> Simple tried to reinvent banking, but they never seemed to go beyond polishing the UI. Simple closed my account with no notice or recourse, because they failed to notify me that I needed to update some information. I honestly can't believe I trusted my money to people so incompetent at even the basics of business.
kevindong 8y ago
> My benchmark is Charles Schwab Bank, which offers free ATM fees on any ATM, anywhere. It's what many millennials that I know use. But, it's a bad product and not very user-friendly. Why do you say it's a bad product? I use Schwab as my main account and it works great for me.
- byproxy 8y ago
  I'm also using Schwab as my main account and for the most part enjoy it. It's not as (seemingly) simple and intuitive as the other products philip1209 mentioned, though. It's a well-established bank/brokerage firm, and it shows in the UI.
- stilky 8y ago
  Same here, they also have very good service. 24/7 chat assistance and I haven't waited for more than 30 seconds to be connected to a customer service representative.
- philip1209 8y ago
  I love Schwab's checking account product because it's highly functional. But, I don't think that it has mass-market appeal. It appeals to a rational buyer, not an emotional one. The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). To make a checking account capture the spending market in the USA, it needs to feel premium and focused - like the Amex app. The spending analysis needs to be great, the card needs easy control in the mobile app, and it needs to inspire confidence. It also needs to feel like a trusted, approachable brand. Schwab makes most of their money on investments. I don't foresee them trying to give mass-market appeal to their checking account, separate from the investment account. A case study in this field is Marcus, a savings app from Goldman Sachs. If Schwab spun out their checking account into a separate sub-brand with branding that appeals to millennials and had a spending-focused mobile app, I could see them doing really well: https://www.marcus.com/us/en/savings https://www.marcus.com/us/en/savings
  - soupsranjan 8y ago
    > The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). I think the converse is true. Card issuers earn 1 percent points higher interchange rates on credit cards (2.60%) than debit cards (1.60%).
fossuser 8y ago
I have everything in Fidelity which seems like it has the same benefits as Schwab, but also with the trading availability and zero fee index accounts (not sure if Schwab has this too). I had simple for a while and the UI was great, app is best of the ones I've seen but they never had anything else (they recently created a savings account) and no checks got annoying to deal with. My Bank of the future would have these features: - Full brokerage account with available trading and zero fee index funds - Free checks - Free wiring/ability to send money to other people's bank accounts - Really good app (like simple's) - Decent interest like Robinhood has here without having to separate things into a savings account - No fees - Credit card to rival Chase Sapphire Reserve or AMEX Platinum with tightly coupled integration into the existing app software. - All ATMs are free (rarely use, but nice to have and Fidelity does it). - Ability to get loans Fidelity has nearly all of these things with some negatives: - App is not that great/UI is bad - Their credit card is bad and not well integrated into their software - Interest is poor Haven is a new startup that's has a pretty cool approach to helping people do the optimal thing with their money (like an automated r/personalfinance), but I'd rather just be able to do it directly with the people holding the money.
- pointytrees 8y ago
  They have quite a few zero fee index funds.
simonsarris 8y ago
> he US seems to have a wave of startups trying to reinvent checking accounts right now. I wonder which, if any, will take the market Square's Cash App + Cash Card is taking the lead here, IMO. Card, direct deposit, ATM usage, p2p payments, rewards program. They've been the #1 app in finance all year on the Apple store, and were #1 in all free apps for a little while this past week. They are massively popular in the south, but the rest of the country may catch up, but I sort of wonder if silicon valley is gonna miss the rise since its out of sight for the time being. For growth and reach see for example: Graph over time: https://trends.google.com/trends/explore?date=all&geo=US&q=cash%20app,venmo https://trends.google.com/trends/explore?date=all&geo=US&q=c... States where cash app dominates so far: https://trends.google.com/trends/explore?date=today%201-m&geo=US&q=cash%20app,venmo https://trends.google.com/trends/explore?date=today%201-m&ge... If Cash App introduced brokerage services it would be over for Robinhood.
- woolvalley 8y ago
  I got a cash card, got a generic undefined activation error and no reply from support. I eventually just shredded the card. When I talk to friends for p2p payments, people mostly use venmo, then messenger & apple pay and nobody uses square cash.
  - krinchan 8y ago
    Same. I send money over Messenger all the time to feiends and family. Southeastern US here.
krn 8y ago
> I consistently heard that Monzo's competitors like Revolut are going to be a future case study in scaling before great product/market fit. I don't know how many people have Revolut accounts, but nobody seems to be using their cards in public. Monzo is a licensed bank in the UK, and Revolut is not. Still, Revolut has about 30% more customers in the UK than Monzo, and about 3x more in total, since it's available in the entire EU. And, unlike Monzo, which is still losing money, Revolut has been profitable since February 2018. That's because Revolut does much more than Monzo. It provides multiple premium account types, virtual credit cards for online payments, business accounts with open API access, credit, insurance, and soon – fee-free stock trading like Robinhood.
- moju 8y ago
  Revolut have a banking license now: https://techcrunch.com/2018/12/12/revolut-gets-european-banking-license-in-lithuania/ https://techcrunch.com/2018/12/12/revolut-gets-european-bank...
  - krn 8y ago
    True. Revolut got its banking license in Lithuania, not in the UK. That's why people in London might prefer Monzo.
woolvalley 8y ago
In America, I don't think contactless matters that much currently. It's really a crap shoot if any specific retailer supports contactless, no major metro system that I know of support direct debit / credit contactless cards and no major bank or credit card company issues contactless cards. If you want to use contactless in america, you add the card to apple / google / samsung pay and use your phone for NFC payments. I get a feeling that america will do a 'leapfrog' in contactless and go directly to smartphone only contactless cards than ever issue a contactless card in the mass market.
- dzhiurgis 8y ago
  Cashier was shocked when I used my contactless card in middle of SF. She nearly screamed "WHAT DID YOU JUST DO???". Meanwhile even in smallest villages of Europe no one bats an eye anymore. America is bizarre!
  - deathanatos 8y ago
    I just flew through 4 different airports in the last week, and every single one of them, the payment device had a chip reader, but all of them were blocked with a piece of cardstock instructing the person to swipe. Why? (I think they're all run by the same company, HMSHost, who, AFAICT as a traveler, has a monopoly on airport food.)
    - callalex 8y ago
      This is a perfect example of how bonkers/stupid banking is in the USA. If the retailer allows you to do a chip/pin transaction (much more secure than a magnetic stripe) THEY are liable for any fraud. Whereas a magnetic stripe transaction (super insecure) places all liability on the payment processor. So there is a perverse incentive to stick with old crappy technology. https://qz.com/717876/the-chip-card-transition-in-the-us-has-been-a-disaster/ https://qz.com/717876/the-chip-card-transition-in-the-us-has...
  - saltysugar 8y ago
    And in Berlin the cashier eyed me suspiciously when I tried to use Google Pay. He was totally expecting the payment to not go through
dazbradbury 8y ago
I wouldn't be surprised given their investor docs mentioning America, their £1bn valuation, and their current growth rate, if Monzo launched in the US in the next 12-18 months. They are a definite contender for your list.
meow81 8y ago
> Simple tried to reinvent banking, but they never seemed to go beyond polishing the UI. I'd take another look at Simple. I've been with them since the beginning and their recent enhancements are fantastic! Expenses tied to your pay schedule that automatically set money aside, same with goals. and then the big one for me was an interest bearing savings account, yielding 2%. See more here: https://www.simple.com/2percent https://www.simple.com/2percent https://www.simple.com/features/expenses https://www.simple.com/features/expenses
- cbhl 8y ago
  Honestly, Simple botched the transition from Bancorp to BBVA. I switched all of my direct deposit and bill pay back to the big banks, closed my account, and never looked back.

zymhan 8y ago

> Simple tried to reinvent banking, but they never seemed to go beyond polishing the UI. Simple closed my account with no notice or recourse, because they failed to notify me that I needed to update some information. I honestly can't believe I trusted my money to people so incompetent at even the basics of business.

kevindong 8y ago

> My benchmark is Charles Schwab Bank, which offers free ATM fees on any ATM, anywhere. It's what many millennials that I know use. But, it's a bad product and not very user-friendly. Why do you say it's a bad product? I use Schwab as my main account and it works great for me.

byproxy 8y ago
I'm also using Schwab as my main account and for the most part enjoy it. It's not as (seemingly) simple and intuitive as the other products philip1209 mentioned, though. It's a well-established bank/brokerage firm, and it shows in the UI.
stilky 8y ago
Same here, they also have very good service. 24/7 chat assistance and I haven't waited for more than 30 seconds to be connected to a customer service representative.
philip1209 8y ago
I love Schwab's checking account product because it's highly functional. But, I don't think that it has mass-market appeal. It appeals to a rational buyer, not an emotional one. The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). To make a checking account capture the spending market in the USA, it needs to feel premium and focused - like the Amex app. The spending analysis needs to be great, the card needs easy control in the mobile app, and it needs to inspire confidence. It also needs to feel like a trusted, approachable brand. Schwab makes most of their money on investments. I don't foresee them trying to give mass-market appeal to their checking account, separate from the investment account. A case study in this field is Marcus, a savings app from Goldman Sachs. If Schwab spun out their checking account into a separate sub-brand with branding that appeals to millennials and had a spending-focused mobile app, I could see them doing really well: https://www.marcus.com/us/en/savings https://www.marcus.com/us/en/savings
- soupsranjan 8y ago
  > The opportunity here for a startup bank is to replace credit card spending in the USA. The potential earnings are huge if you can get consumers to spend on a debit card instead of a credit card (because the rake is higher). I think the converse is true. Card issuers earn 1 percent points higher interchange rates on credit cards (2.60%) than debit cards (1.60%).

fossuser 8y ago

I have everything in Fidelity which seems like it has the same benefits as Schwab, but also with the trading availability and zero fee index accounts (not sure if Schwab has this too). I had simple for a while and the UI was great, app is best of the ones I've seen but they never had anything else (they recently created a savings account) and no checks got annoying to deal with. My Bank of the future would have these features: - Full brokerage account with available trading and zero fee index funds - Free checks - Free wiring/ability to send money to other people's bank accounts - Really good app (like simple's) - Decent interest like Robinhood has here without having to separate things into a savings account - No fees - Credit card to rival Chase Sapphire Reserve or AMEX Platinum with tightly coupled integration into the existing app software. - All ATMs are free (rarely use, but nice to have and Fidelity does it). - Ability to get loans Fidelity has nearly all of these things with some negatives: - App is not that great/UI is bad - Their credit card is bad and not well integrated into their software - Interest is poor Haven is a new startup that's has a pretty cool approach to helping people do the optimal thing with their money (like an automated r/personalfinance), but I'd rather just be able to do it directly with the people holding the money.

pointytrees 8y ago
They have quite a few zero fee index funds.

simonsarris 8y ago

> he US seems to have a wave of startups trying to reinvent checking accounts right now. I wonder which, if any, will take the market Square's Cash App + Cash Card is taking the lead here, IMO. Card, direct deposit, ATM usage, p2p payments, rewards program. They've been the #1 app in finance all year on the Apple store, and were #1 in all free apps for a little while this past week. They are massively popular in the south, but the rest of the country may catch up, but I sort of wonder if silicon valley is gonna miss the rise since its out of sight for the time being. For growth and reach see for example: Graph over time: https://trends.google.com/trends/explore?date=all&geo=US&q=cash%20app,venmo https://trends.google.com/trends/explore?date=all&geo=US&q=c... States where cash app dominates so far: https://trends.google.com/trends/explore?date=today%201-m&geo=US&q=cash%20app,venmo https://trends.google.com/trends/explore?date=today%201-m&ge... If Cash App introduced brokerage services it would be over for Robinhood.

woolvalley 8y ago
I got a cash card, got a generic undefined activation error and no reply from support. I eventually just shredded the card. When I talk to friends for p2p payments, people mostly use venmo, then messenger & apple pay and nobody uses square cash.
- krinchan 8y ago
  Same. I send money over Messenger all the time to feiends and family. Southeastern US here.

krn 8y ago

> I consistently heard that Monzo's competitors like Revolut are going to be a future case study in scaling before great product/market fit. I don't know how many people have Revolut accounts, but nobody seems to be using their cards in public. Monzo is a licensed bank in the UK, and Revolut is not. Still, Revolut has about 30% more customers in the UK than Monzo, and about 3x more in total, since it's available in the entire EU. And, unlike Monzo, which is still losing money, Revolut has been profitable since February 2018. That's because Revolut does much more than Monzo. It provides multiple premium account types, virtual credit cards for online payments, business accounts with open API access, credit, insurance, and soon – fee-free stock trading like Robinhood.

moju 8y ago
Revolut have a banking license now: https://techcrunch.com/2018/12/12/revolut-gets-european-banking-license-in-lithuania/ https://techcrunch.com/2018/12/12/revolut-gets-european-bank...
- krn 8y ago
  True. Revolut got its banking license in Lithuania, not in the UK. That's why people in London might prefer Monzo.

woolvalley 8y ago

In America, I don't think contactless matters that much currently. It's really a crap shoot if any specific retailer supports contactless, no major metro system that I know of support direct debit / credit contactless cards and no major bank or credit card company issues contactless cards. If you want to use contactless in america, you add the card to apple / google / samsung pay and use your phone for NFC payments. I get a feeling that america will do a 'leapfrog' in contactless and go directly to smartphone only contactless cards than ever issue a contactless card in the mass market.

dzhiurgis 8y ago
Cashier was shocked when I used my contactless card in middle of SF. She nearly screamed "WHAT DID YOU JUST DO???". Meanwhile even in smallest villages of Europe no one bats an eye anymore. America is bizarre!
- deathanatos 8y ago
  I just flew through 4 different airports in the last week, and every single one of them, the payment device had a chip reader, but all of them were blocked with a piece of cardstock instructing the person to swipe. Why? (I think they're all run by the same company, HMSHost, who, AFAICT as a traveler, has a monopoly on airport food.)
  - callalex 8y ago
    This is a perfect example of how bonkers/stupid banking is in the USA. If the retailer allows you to do a chip/pin transaction (much more secure than a magnetic stripe) THEY are liable for any fraud. Whereas a magnetic stripe transaction (super insecure) places all liability on the payment processor. So there is a perverse incentive to stick with old crappy technology. https://qz.com/717876/the-chip-card-transition-in-the-us-has-been-a-disaster/ https://qz.com/717876/the-chip-card-transition-in-the-us-has...
- saltysugar 8y ago
  And in Berlin the cashier eyed me suspiciously when I tried to use Google Pay. He was totally expecting the payment to not go through

dazbradbury 8y ago

I wouldn't be surprised given their investor docs mentioning America, their £1bn valuation, and their current growth rate, if Monzo launched in the US in the next 12-18 months. They are a definite contender for your list.

meow81 8y ago

> Simple tried to reinvent banking, but they never seemed to go beyond polishing the UI. I'd take another look at Simple. I've been with them since the beginning and their recent enhancements are fantastic! Expenses tied to your pay schedule that automatically set money aside, same with goals. and then the big one for me was an interest bearing savings account, yielding 2%. See more here: https://www.simple.com/2percent https://www.simple.com/2percent https://www.simple.com/features/expenses https://www.simple.com/features/expenses

cbhl 8y ago
Honestly, Simple botched the transition from Bancorp to BBVA. I switched all of my direct deposit and bill pay back to the big banks, closed my account, and never looked back.