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Y Combinator invests in Monzo through its Continuity Fund

135 points by satchet 7y ago

thomasedwards 7y ago
I had assumed that Monzo would sell to one of the big banks that forgot (or couldn’t be bothered) to make their consumer experience better. But this feels more like they could publicly trade at some point, although they might need to make a profit sooner than in 10 years’ time.
- loriverkutya 7y ago
  They always stated, they have no intention to be sold to a big bank.
  - frenchman99 7y ago
    Intentions can change.
    - andy_ppp 7y ago
      Haha, that's ridiculous, I know for a fact they have had face to face meetings with RBS for example. I doubt they will sell while they are still growing, but they will sell.
      - tommy5dollar 7y ago
        They use RBS as a routing bank for international payments, so obviously they've had meetings with them
  - dazc 7y ago
    Where've we heard that before?
  - unfunco 7y ago
    https://blog.whatsapp.com/245/Why-we-dont-sell-ads https://blog.whatsapp.com/245/Why-we-dont-sell-ads https://www.techradar.com/uk/news/whatsapp-ads-to-appear-in-app-from-2020 https://www.techradar.com/uk/news/whatsapp-ads-to-appear-in-...
benj111 7y ago
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.
- munchor 7y ago
  I believe their plan revolves around lending money and then charging interest on that (like typical banks). They already support overdrafts[1] on their app. [1]: https://monzo.com/features/overdrafts/ https://monzo.com/features/overdrafts/
  - benj111 7y ago
    Right, but every other bank offers overdrafts and still don't make much money from current accounts. 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. [1] https://www.bbc.co.uk/news/business-48553193 https://www.bbc.co.uk/news/business-48553193
    - shawabawa3 7y ago
      That bans fixed fees - (e.g. you get charged £1 a day when in overdraft) 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"
      - benj111 7y ago
        Read the GPs link "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.
RickS 7y ago
I'm very hopeful for Monzo, with some caveats. They have a lot of fascinating and useful DNA having gotten started in the UK before the US. The UK's regulatory environment for digital banking is leagues ahead of America's, w/r/t data access, APIs, etc. If they can persist UK style data features through their American rollout, they'll have something no other American bank currently offers. While my strong suspicion is that the UK's push for digitization / interoperability in the financial sector stems from Orwellian nanny-state ambitions that would be right at home in China's playbook, it would be fantastic if we could somehow manage to empower customers with access to their own information without similarly empowering data-thirsty governments to surveil and oppress. The scary parts are probably going make headway regardless, so cheers to the silver lining in the interim.
- NeedMoreTea 7y ago
  I thought the open banking and connectivity drive came from Europe's Payment Services Directives, and was EU wide.
- randomvectors 7y ago
  This is where they actually bring value right? - Delivering a good banking product outside of the UK. Because as a UK customer I see no reason to switch after trying Monzo for a couple of months. Positives: - a nicer mobile banking app Negatives: - no credit cards and no option to top up using a credit card from another bank - no physical branches Everything else is comparable to most other banks in the UK. Which isn't bad, just nothing worth switching banks for.
  - Folcon 7y ago
    I wouldn't undervalue the effect of getting a notification every time your account gets used with additional details and the trivial ability to look back over past transactions whenever you want. I'm constantly surprised by how useful the app is.
    - jon-wood 7y ago
lordnacho 7y ago
The UK bank space could do with some fresh players. Currently I'm looking for a new bank for my business, because: 1) I need to have foreign currency accounts. My bank has them, but I'm unable to see the accounts when I log in. They've known about this for 4 months now, and I keep getting sent in circles by the Indian call centre. They've sent me to branch twice, with no coordination, the people in the branch can't help me either. 2) I need to have an end-of-year statement for my taxes. It seems someone messed up the SQL or something, because I have statements for every month, except the end of the year. They haven't fixed this either. So I've started looking around for other banks, but most of the challenger banks don't do multi currency accounts. I'm in the market for a new personal account as well. Revolut works just fine technically, but I don't like what's being said about them and I'd rather not support them now. It would be nice to have business and personal together, but that seems hard to find among the challenger banks, since they seem to not do FX. (I've emailed several over the past week.) Lastly TransferWise does Borderless, which seems like exactly what I need, but it seems to not be a real bank account. Certain online businesses require withdrawals to be to someone (or a business) whose name matches what they have as their account details, and that doesn't work with their scheme.
- Scirra_Tom 7y ago
  We use Barclays and have EUR and USD accounts with them which we can see online and make transfers/payments online with. Allows us to have a USD Amex, and do a lot of our Forex with Transferwise. Saved tens of thousands over the years on Forex with this method, and expensing some of our USD infrastructure costs on Amex helps as well. Last pain point for us is getting a USD account in USA so we can cashout Paypal USD balances. Found companies that promise ability to do this but after wasting lots of time turns out they can't.
  - martinald 7y ago
    Transferwise can give you a US ACH account with a USD balance which you can then convert and send. Not sure if that helps?
    - 7y ago
syx 7y ago
I just found out about Monzo yesterday when I read an article regarding poor quality of Revolut customer service [1]. This banking app looks very promising, I would really like to try it but I'm in Dublin Ireland and here Revolut is basically the de facto of banking apps. How will they deal with this sort of competition? [1] https://news.ycombinator.com/item?id=20261823 https://news.ycombinator.com/item?id=20261823
- dunk010 7y ago
  That's a terrifying story in that link :-|
  - syx 7y ago
    I know that's why I'm currently looking for a better alternative, but if no one uses Monzo here, I don't really see a reason to switch.
    - secfirstmd 7y ago
      Dublin based here also. Agreed on Revolut, they have the best app in my opinion but I just recently signed up to n26 as they are a more solid company.
dazbradbury 7y ago
Big congrats to Monzo, and I can't wait to see what their marketplace looks like when it's finally fleshed out. What's the state of account switching in the US? I'd have thought a big part of Monzo's strength in the UK is the mandated account switching service: https://www.currentaccountswitch.co.uk/ https://www.currentaccountswitch.co.uk/ Is there an equivalent system in the US to reduce the friction of switching banks?
- obeattie 7y ago
  I don't think an equivalent of the Current Account Switch Service exists in the US, which is a shame. But I don't think this is crucial. We had around 5,500 switches via the Current Account Switch Service in May, but added around 200,000 new customers.
  - dazbradbury 7y ago
    Oh wow - I thought the current account numbers were driven far more by switching. Presumably it impacts the % where salary is being paid in? But at those numbers maybe it's irrelevant! Great job again, and as I say, can't wait for the fully fleshed out marketplace.
  - silasdavis 7y ago
    It's unfortunate that the fully automated service requires you to close your the source account completely when switching. I was about to push the button on getting my salary paid into my monzo account but a diversity of current accounts has its uses. I think the justification for only providing switch and close was that it was the only way to reliably avoid double payments IIRC. Personally I would have taken that risk and resolved them manually if necessary.
krn 7y ago
I wish Monzo was available in continental Europe as an alternative to Revolut before expanding to the US. As a product, I find Revolut to be much better thought-out offering for both, private customers[1] and businesses[2], but as a company I trust Monzo a way more. [1] https://www.revolut.com/our-pricing-plans https://www.revolut.com/our-pricing-plans [2] https://www.revolut.com/business-accounts-made-easy https://www.revolut.com/business-accounts-made-easy
- yRetsyM 7y ago
  Another victim of Brexit uncertainty, as I understand it - because of uncertainty of best approach post Brexit they paused continental Europe plans.
  - krn 7y ago
    They could have just got a banking license in Ireland. I believe they still need to apply for one in the US. At least in terms of the population, the EU market is 60% larger than the US, and Europeans are already used to paying for everything with debit cards. Also, in many EU countries people rarely do chargebacks or expect them to succeed, which makes supporting them much easier.
    - wastedhours 7y ago
      > the EU market is 60% larger than the US, and Europeans are already used to paying for everything with debit cards. I'd argue the other side and say the EU isn't a single market when it comes to payment and banking culture. I'd also argue that there are large swathes of Europe that still don't have a card culture. My personal anecdata on chargebacks corroborates yours, but my own assumption is that the market for a fintech company is much larger in the States than in continental Europe.
      - Jhsto 7y ago
        I've needed cash more often in San Francisco than I've needed anywhere in Europe in the last 5 years. To my experience, even the smallest shops in most of Europe accept contactless payments, whereas in the States the smaller ones did not accept card payments for purchases under 2 (or sometimes even 20) dollars. I'd agree that the market for a fintech company in the States is much larger, but this is solely because its current state is so bad.
hakanensari 7y ago
Not to be dismissive, but would these challenger banks (Monzo, Revolut, N26, TransferWise) survive once the regular banks and AmEx stop adding fees on top of foreign-currency charges and withdrawals? I personally don't see any other differentiating factor, and frankly, maintaining multiple cards and having to top up, etc. are a hassle.
- prdonahue 7y ago
  Innovator's Dilemma.. you get hooked on the high margin business and are afraid to disrupt yourself. Don't underestimate institutional inertia.
- fnordsensei 7y ago
  I know for a fact that banks in Sweden are (and have been for a long time) adopting a very defensive position. This includes working hard to convolute legislation and introducing infrastructure that is mandatory to participate in the market, but too complex to implement/abide by for a startup, or too high cost/low value compared to the available market for an established bank. The purpose, of course, is to keep the banks from central Europe out of Sweden, and that includes N26 et. al. They have very little interest or ability to compete with them, neither in terms of fees nor UX. Fortification and minefields are therefore the best alternatives. A few years ago, the CEO of a (then) new investment bank famously said that they will be the last bank created in Swedish history, due to the above.
- OJFord 7y ago
  > maintaining multiple cards and having to top up, etc. are a hassle. So don't do that? I think I still have a 'regular bank' account open, but I don't use it at all. Salary goes into Monzo, and payments go out. It's the only debit card in my wallet and that I use.
  - hakanensari 7y ago
    > So don't do that? I didn't switch wholesale because I'm not fully convinced. I feel these new banks and bank-like offers will for some time search for a right fit and may change or disappear in the next few years. Also, no-fees-abroad is a great feature, but perhaps not the 10x to spur (my) wholesale adoption. Maybe I'm just not an early adopter (although I use them abroad, so in a way, I am).
astannard 7y ago
I do like Monzo, they are one of the few startups I have invested in. I tend to personally use them for my fun money and still use my long time bank for paying the bills and getting my wages etc I transfer my monthly spending money to Monzo and when that runs out the fun stops.
- mojuba 7y ago
  Same here. Something still prevents me from taking Monzo and similar banks seriously and manage my entire income on their accounts, though can't say what it is. Maybe it's the "you can't possibly trust a bank that's not even profitable" despite all the effort of cutting costs, e.g. no walk-in offices and so on. That, coupled with being "ethical" as a selling point somehow doesn't sound great in the context of banking.
  - astannard 7y ago
    Yes, I think when I feel comfortable that they will stick around I will feel comfortable with putting my wages in.
- amsterdam_guilt 7y ago
  How do you invest in them? Seems like an good bet.
  - M2Ys4U 7y ago
    Every now and then they solicit crowdfunding. You buy a beneficial interest in a fraction of an allotment of shares owned by a crowdfunding platform through the Monzo app.
bleigh0 7y ago
Congrats to Tom and the Monzo team. I've had an account since the days of 'Mondo', and the focus on user experience and trust has endured (and if anything maybe increased).
senthilnayagam 7y ago
India has its set of branchless digital banks, Paytm is the leader. India also has other things which is driving digital payment adoption, Aadhar based KYC system, UPI payment interoperability system. Google Pay, PhonePe, Amazon Pay and many other payment apps are now bringing payment to the masses. and suddenly we realise, India leapfrogged many developed nations in the process
- break_the_bank 7y ago
  Monzo is very heavily used in physical stores in the UK. Paytm doesn't have enough usage in the physical world apart from transferring money to friends. RBI releases bank usage every few month, here is a link to see statistics https://rbi.org.in/Scripts/ATMView.aspx https://rbi.org.in/Scripts/ATMView.aspx. Monzo is the standard bank account of a lot of millennials. I could see something like Monzo making it big in India, being an Indian living in the UK.
matthewmacleod 7y ago
I know there's a bit of scepticism about Monzo in particular, but here's the deal from my perspective as a customer and crowdfunder: it's a straightforward banking service, and has a great app (which is where I do basically all banking anyway). That's basically it. Fee-free foreign transactions are a nice positive too, though I'm not that bothered. Some of the larger banks have begun introducing features to compete – stuff like being able to freeze and re-order cards. So that's good. At the point it was introduced though, the experience was notably better than any other option. For me as a customer, the main goal of a retail bank is to store my cash, make it accessible, keep it secure, and notify me about transactions – basically, keep out of the way as much as possible. It's good at that, better than any other bank I've used, and I think that simplicity is underrated.
- samwhiteUK 7y ago
  Bingo. The fact that I can see all my transactions, automatically categorised, in an app that is much prettier, full-featured and simple than the crap that Halifax put out, is brilliant. Combine that with a simple setup process, never having to interact with humans or call centres, and add tha bility to automatically save, interact with IFTTT etc and you have a very compelling package and I hope they continue to do well
  - cameronbrown 7y ago
    > never having to interact with humans or call centres Many people would argue this is a tech company's biggest flaw.
    - Balero 7y ago
      Never having to?? I can understand "never being able to" being a flaw. But if I can get my stuff done without talking to someone then that is brilliant. I don't have to go out of my way to go somewhere, I don't have to bother with a bad phone reception, I don't have to wait in a line for it to be my turn. I just do the things I need to do when it is convenient for me. If I want to open a savings "pot" (Monzo version of a savings account). Then I can do it on the bus on the way to work. I don't have to take time off to go to a branch, or prove I am me on a phone call etc. I just use the app, and it's all done.
lprd 7y ago
Does Monzo plan to be available in other European countries? I live in France and would love to open an account with them - but you have to maintain a UK address in order to do so.
neillyons 7y ago
Monzo are great. For those who are interesting they built most of their backend in Go https://www.youtube.com/watch?v=iRNwLjKeVRE https://www.youtube.com/watch?v=iRNwLjKeVRE
rchaud 7y ago
> The company is one of several so-called challenger banks taking advantage of the growing shift among consumers toward handling their finances on a smartphone. As opposed to handling their finances on a website, like people have been doing for the past decade? Even the smallest credit unions have apps these days. What is "fintech" about this? > The branchless bank is now making £4 on each customer it signs up to the platform, versus a £15 loss per customer last year, according to a company spokesperson. Where's the GBP 2.5 billion valuation coming from then? There's not much detail at all in the article. I don't want to default to cynicism, but this seems like a company whose profile fits the current SV hype train, puffing up valuations and eventually taking the company public, all before a single penny of profit has been made.
- nicoburns 7y ago
  Not sure I agree with this. A huge number of young people I know in the UK have switched to Monzo as their primary bank account. The business model is simple: the same as any other bank. Their competitive advantage is: 1. Having better technical capabilities than traditional banks (they have apps, but they're usually limited and clunky). 2. Not having physical branches, and the associated costs.
  - rchaud 7y ago
    The article was very light on details, so I'd appreciate if could you elaborate on the technical capabilities of the app. I get suspicious when I see comments like: > One reason that led Y Combinator to invest, Hariharan said, “was the traction with which they hit 2 million users in the U.K., with engagement metrics that almost look like a social network.” It's a bank app. I can't speak for most people, but I don't open my bank app more than a couple of times a month; it's to pay my CC bill, and to make the occasional bank to bank transfer. If I'm spending a lot of time in the app, I'm probably encountering a problem of some kind. I also can't link "app engagement" with revenue. Banks make money on mortgages, lines of credit and other financial products. I suppose daily logins allow them to advertise this heavily (my bank does it too, and I hate it), but to draw a line from A to B is a bit of a stretch.
antaviana 7y ago
I noted that stripe is an investor for this round. Strategic move towards more vertical integration?
dannylandau 7y ago
I use Simple (bank) and really like it. Seems like a lot of overlap with Monzo.

135 points by satchet 7y ago

I had assumed that Monzo would sell to one of the big banks that forgot (or couldn’t be bothered) to make their consumer experience better. But this feels more like they could publicly trade at some point, although they might need to make a profit sooner than in 10 years’ time.

loriverkutya 7y ago
They always stated, they have no intention to be sold to a big bank.
- frenchman99 7y ago
  Intentions can change.
  - andy_ppp 7y ago
    Haha, that's ridiculous, I know for a fact they have had face to face meetings with RBS for example. I doubt they will sell while they are still growing, but they will sell.
    - tommy5dollar 7y ago
      They use RBS as a routing bank for international payments, so obviously they've had meetings with them
- dazc 7y ago
  Where've we heard that before?
- unfunco 7y ago
  https://blog.whatsapp.com/245/Why-we-dont-sell-ads https://blog.whatsapp.com/245/Why-we-dont-sell-ads https://www.techradar.com/uk/news/whatsapp-ads-to-appear-in-app-from-2020 https://www.techradar.com/uk/news/whatsapp-ads-to-appear-in-...

benj111 7y ago

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.

munchor 7y ago
I believe their plan revolves around lending money and then charging interest on that (like typical banks). They already support overdrafts[1] on their app. [1]: https://monzo.com/features/overdrafts/ https://monzo.com/features/overdrafts/
- benj111 7y ago
  Right, but every other bank offers overdrafts and still don't make much money from current accounts. 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. [1] https://www.bbc.co.uk/news/business-48553193 https://www.bbc.co.uk/news/business-48553193
  - shawabawa3 7y ago
    That bans fixed fees - (e.g. you get charged £1 a day when in overdraft) 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"
    - benj111 7y ago
      Read the GPs link "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.

RickS 7y ago

I'm very hopeful for Monzo, with some caveats. They have a lot of fascinating and useful DNA having gotten started in the UK before the US. The UK's regulatory environment for digital banking is leagues ahead of America's, w/r/t data access, APIs, etc. If they can persist UK style data features through their American rollout, they'll have something no other American bank currently offers. While my strong suspicion is that the UK's push for digitization / interoperability in the financial sector stems from Orwellian nanny-state ambitions that would be right at home in China's playbook, it would be fantastic if we could somehow manage to empower customers with access to their own information without similarly empowering data-thirsty governments to surveil and oppress. The scary parts are probably going make headway regardless, so cheers to the silver lining in the interim.

NeedMoreTea 7y ago
I thought the open banking and connectivity drive came from Europe's Payment Services Directives, and was EU wide.
randomvectors 7y ago
This is where they actually bring value right? - Delivering a good banking product outside of the UK. Because as a UK customer I see no reason to switch after trying Monzo for a couple of months. Positives: - a nicer mobile banking app Negatives: - no credit cards and no option to top up using a credit card from another bank - no physical branches Everything else is comparable to most other banks in the UK. Which isn't bad, just nothing worth switching banks for.
- Folcon 7y ago
  I wouldn't undervalue the effect of getting a notification every time your account gets used with additional details and the trivial ability to look back over past transactions whenever you want. I'm constantly surprised by how useful the app is.
  - jon-wood 7y ago

lordnacho 7y ago

The UK bank space could do with some fresh players. Currently I'm looking for a new bank for my business, because: 1) I need to have foreign currency accounts. My bank has them, but I'm unable to see the accounts when I log in. They've known about this for 4 months now, and I keep getting sent in circles by the Indian call centre. They've sent me to branch twice, with no coordination, the people in the branch can't help me either. 2) I need to have an end-of-year statement for my taxes. It seems someone messed up the SQL or something, because I have statements for every month, except the end of the year. They haven't fixed this either. So I've started looking around for other banks, but most of the challenger banks don't do multi currency accounts. I'm in the market for a new personal account as well. Revolut works just fine technically, but I don't like what's being said about them and I'd rather not support them now. It would be nice to have business and personal together, but that seems hard to find among the challenger banks, since they seem to not do FX. (I've emailed several over the past week.) Lastly TransferWise does Borderless, which seems like exactly what I need, but it seems to not be a real bank account. Certain online businesses require withdrawals to be to someone (or a business) whose name matches what they have as their account details, and that doesn't work with their scheme.

Scirra_Tom 7y ago
We use Barclays and have EUR and USD accounts with them which we can see online and make transfers/payments online with. Allows us to have a USD Amex, and do a lot of our Forex with Transferwise. Saved tens of thousands over the years on Forex with this method, and expensing some of our USD infrastructure costs on Amex helps as well. Last pain point for us is getting a USD account in USA so we can cashout Paypal USD balances. Found companies that promise ability to do this but after wasting lots of time turns out they can't.
- martinald 7y ago
  Transferwise can give you a US ACH account with a USD balance which you can then convert and send. Not sure if that helps?
  - 7y ago

syx 7y ago

I just found out about Monzo yesterday when I read an article regarding poor quality of Revolut customer service [1]. This banking app looks very promising, I would really like to try it but I'm in Dublin Ireland and here Revolut is basically the de facto of banking apps. How will they deal with this sort of competition? [1] https://news.ycombinator.com/item?id=20261823 https://news.ycombinator.com/item?id=20261823

dunk010 7y ago
That's a terrifying story in that link :-|
- syx 7y ago
  I know that's why I'm currently looking for a better alternative, but if no one uses Monzo here, I don't really see a reason to switch.
  - secfirstmd 7y ago
    Dublin based here also. Agreed on Revolut, they have the best app in my opinion but I just recently signed up to n26 as they are a more solid company.

dazbradbury 7y ago

Big congrats to Monzo, and I can't wait to see what their marketplace looks like when it's finally fleshed out. What's the state of account switching in the US? I'd have thought a big part of Monzo's strength in the UK is the mandated account switching service: https://www.currentaccountswitch.co.uk/ https://www.currentaccountswitch.co.uk/ Is there an equivalent system in the US to reduce the friction of switching banks?

obeattie 7y ago
I don't think an equivalent of the Current Account Switch Service exists in the US, which is a shame. But I don't think this is crucial. We had around 5,500 switches via the Current Account Switch Service in May, but added around 200,000 new customers.
- dazbradbury 7y ago
  Oh wow - I thought the current account numbers were driven far more by switching. Presumably it impacts the % where salary is being paid in? But at those numbers maybe it's irrelevant! Great job again, and as I say, can't wait for the fully fleshed out marketplace.
- silasdavis 7y ago
  It's unfortunate that the fully automated service requires you to close your the source account completely when switching. I was about to push the button on getting my salary paid into my monzo account but a diversity of current accounts has its uses. I think the justification for only providing switch and close was that it was the only way to reliably avoid double payments IIRC. Personally I would have taken that risk and resolved them manually if necessary.

krn 7y ago

I wish Monzo was available in continental Europe as an alternative to Revolut before expanding to the US. As a product, I find Revolut to be much better thought-out offering for both, private customers[1] and businesses[2], but as a company I trust Monzo a way more. [1] https://www.revolut.com/our-pricing-plans https://www.revolut.com/our-pricing-plans [2] https://www.revolut.com/business-accounts-made-easy https://www.revolut.com/business-accounts-made-easy

yRetsyM 7y ago
Another victim of Brexit uncertainty, as I understand it - because of uncertainty of best approach post Brexit they paused continental Europe plans.
- krn 7y ago
  They could have just got a banking license in Ireland. I believe they still need to apply for one in the US. At least in terms of the population, the EU market is 60% larger than the US, and Europeans are already used to paying for everything with debit cards. Also, in many EU countries people rarely do chargebacks or expect them to succeed, which makes supporting them much easier.
  - wastedhours 7y ago
    > the EU market is 60% larger than the US, and Europeans are already used to paying for everything with debit cards. I'd argue the other side and say the EU isn't a single market when it comes to payment and banking culture. I'd also argue that there are large swathes of Europe that still don't have a card culture. My personal anecdata on chargebacks corroborates yours, but my own assumption is that the market for a fintech company is much larger in the States than in continental Europe.
    - Jhsto 7y ago
      I've needed cash more often in San Francisco than I've needed anywhere in Europe in the last 5 years. To my experience, even the smallest shops in most of Europe accept contactless payments, whereas in the States the smaller ones did not accept card payments for purchases under 2 (or sometimes even 20) dollars. I'd agree that the market for a fintech company in the States is much larger, but this is solely because its current state is so bad.

hakanensari 7y ago

Not to be dismissive, but would these challenger banks (Monzo, Revolut, N26, TransferWise) survive once the regular banks and AmEx stop adding fees on top of foreign-currency charges and withdrawals? I personally don't see any other differentiating factor, and frankly, maintaining multiple cards and having to top up, etc. are a hassle.

prdonahue 7y ago
Innovator's Dilemma.. you get hooked on the high margin business and are afraid to disrupt yourself. Don't underestimate institutional inertia.
fnordsensei 7y ago
I know for a fact that banks in Sweden are (and have been for a long time) adopting a very defensive position. This includes working hard to convolute legislation and introducing infrastructure that is mandatory to participate in the market, but too complex to implement/abide by for a startup, or too high cost/low value compared to the available market for an established bank. The purpose, of course, is to keep the banks from central Europe out of Sweden, and that includes N26 et. al. They have very little interest or ability to compete with them, neither in terms of fees nor UX. Fortification and minefields are therefore the best alternatives. A few years ago, the CEO of a (then) new investment bank famously said that they will be the last bank created in Swedish history, due to the above.
OJFord 7y ago
> maintaining multiple cards and having to top up, etc. are a hassle. So don't do that? I think I still have a 'regular bank' account open, but I don't use it at all. Salary goes into Monzo, and payments go out. It's the only debit card in my wallet and that I use.
- hakanensari 7y ago
  > So don't do that? I didn't switch wholesale because I'm not fully convinced. I feel these new banks and bank-like offers will for some time search for a right fit and may change or disappear in the next few years. Also, no-fees-abroad is a great feature, but perhaps not the 10x to spur (my) wholesale adoption. Maybe I'm just not an early adopter (although I use them abroad, so in a way, I am).

astannard 7y ago

I do like Monzo, they are one of the few startups I have invested in. I tend to personally use them for my fun money and still use my long time bank for paying the bills and getting my wages etc I transfer my monthly spending money to Monzo and when that runs out the fun stops.

mojuba 7y ago
Same here. Something still prevents me from taking Monzo and similar banks seriously and manage my entire income on their accounts, though can't say what it is. Maybe it's the "you can't possibly trust a bank that's not even profitable" despite all the effort of cutting costs, e.g. no walk-in offices and so on. That, coupled with being "ethical" as a selling point somehow doesn't sound great in the context of banking.
- astannard 7y ago
  Yes, I think when I feel comfortable that they will stick around I will feel comfortable with putting my wages in.
amsterdam_guilt 7y ago
How do you invest in them? Seems like an good bet.
- M2Ys4U 7y ago
  Every now and then they solicit crowdfunding. You buy a beneficial interest in a fraction of an allotment of shares owned by a crowdfunding platform through the Monzo app.

bleigh0 7y ago

Congrats to Tom and the Monzo team. I've had an account since the days of 'Mondo', and the focus on user experience and trust has endured (and if anything maybe increased).

senthilnayagam 7y ago

India has its set of branchless digital banks, Paytm is the leader. India also has other things which is driving digital payment adoption, Aadhar based KYC system, UPI payment interoperability system. Google Pay, PhonePe, Amazon Pay and many other payment apps are now bringing payment to the masses. and suddenly we realise, India leapfrogged many developed nations in the process

break_the_bank 7y ago
Monzo is very heavily used in physical stores in the UK. Paytm doesn't have enough usage in the physical world apart from transferring money to friends. RBI releases bank usage every few month, here is a link to see statistics https://rbi.org.in/Scripts/ATMView.aspx https://rbi.org.in/Scripts/ATMView.aspx. Monzo is the standard bank account of a lot of millennials. I could see something like Monzo making it big in India, being an Indian living in the UK.

matthewmacleod 7y ago

I know there's a bit of scepticism about Monzo in particular, but here's the deal from my perspective as a customer and crowdfunder: it's a straightforward banking service, and has a great app (which is where I do basically all banking anyway). That's basically it. Fee-free foreign transactions are a nice positive too, though I'm not that bothered. Some of the larger banks have begun introducing features to compete – stuff like being able to freeze and re-order cards. So that's good. At the point it was introduced though, the experience was notably better than any other option. For me as a customer, the main goal of a retail bank is to store my cash, make it accessible, keep it secure, and notify me about transactions – basically, keep out of the way as much as possible. It's good at that, better than any other bank I've used, and I think that simplicity is underrated.

samwhiteUK 7y ago
Bingo. The fact that I can see all my transactions, automatically categorised, in an app that is much prettier, full-featured and simple than the crap that Halifax put out, is brilliant. Combine that with a simple setup process, never having to interact with humans or call centres, and add tha bility to automatically save, interact with IFTTT etc and you have a very compelling package and I hope they continue to do well
- cameronbrown 7y ago
  > never having to interact with humans or call centres Many people would argue this is a tech company's biggest flaw.
  - Balero 7y ago
    Never having to?? I can understand "never being able to" being a flaw. But if I can get my stuff done without talking to someone then that is brilliant. I don't have to go out of my way to go somewhere, I don't have to bother with a bad phone reception, I don't have to wait in a line for it to be my turn. I just do the things I need to do when it is convenient for me. If I want to open a savings "pot" (Monzo version of a savings account). Then I can do it on the bus on the way to work. I don't have to take time off to go to a branch, or prove I am me on a phone call etc. I just use the app, and it's all done.

lprd 7y ago

Does Monzo plan to be available in other European countries? I live in France and would love to open an account with them - but you have to maintain a UK address in order to do so.

neillyons 7y ago

Monzo are great. For those who are interesting they built most of their backend in Go https://www.youtube.com/watch?v=iRNwLjKeVRE https://www.youtube.com/watch?v=iRNwLjKeVRE

rchaud 7y ago

> The company is one of several so-called challenger banks taking advantage of the growing shift among consumers toward handling their finances on a smartphone. As opposed to handling their finances on a website, like people have been doing for the past decade? Even the smallest credit unions have apps these days. What is "fintech" about this? > The branchless bank is now making £4 on each customer it signs up to the platform, versus a £15 loss per customer last year, according to a company spokesperson. Where's the GBP 2.5 billion valuation coming from then? There's not much detail at all in the article. I don't want to default to cynicism, but this seems like a company whose profile fits the current SV hype train, puffing up valuations and eventually taking the company public, all before a single penny of profit has been made.

nicoburns 7y ago
Not sure I agree with this. A huge number of young people I know in the UK have switched to Monzo as their primary bank account. The business model is simple: the same as any other bank. Their competitive advantage is: 1. Having better technical capabilities than traditional banks (they have apps, but they're usually limited and clunky). 2. Not having physical branches, and the associated costs.
- rchaud 7y ago
  The article was very light on details, so I'd appreciate if could you elaborate on the technical capabilities of the app. I get suspicious when I see comments like: > One reason that led Y Combinator to invest, Hariharan said, “was the traction with which they hit 2 million users in the U.K., with engagement metrics that almost look like a social network.” It's a bank app. I can't speak for most people, but I don't open my bank app more than a couple of times a month; it's to pay my CC bill, and to make the occasional bank to bank transfer. If I'm spending a lot of time in the app, I'm probably encountering a problem of some kind. I also can't link "app engagement" with revenue. Banks make money on mortgages, lines of credit and other financial products. I suppose daily logins allow them to advertise this heavily (my bank does it too, and I hate it), but to draw a line from A to B is a bit of a stretch.

antaviana 7y ago

I noted that stripe is an investor for this round. Strategic move towards more vertical integration?

dannylandau 7y ago

I use Simple (bank) and really like it. Seems like a lot of overlap with Monzo.