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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 cus

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.
      - shawabawa3 7y ago
        oh, my bad, I didn't realise Monzo used a fixed fee. I'm glad they have to change that, that's payday-loan level APR for small overdraft balances I was thinking of Starling's overdraft (similar UK bank) which is 15% APR with no fixed fee
    - DanBC 7y ago
      Here's the link to the FCA press release: https://www.fca.org.uk/news/press-releases/fca-confirms-biggest-shake-up-overdraft-market https://www.fca.org.uk/news/press-releases/fca-confirms-bigg... > 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.
iamnotacrook 7y ago
Having millions of people lend you billions of pounds you can invest/trade short term is the sort of loss I want to get into!
- benj111 7y ago
  Yes, just like Lehman Brothers / Northern Rock.
  - iamnotacrook 7y ago
    Weren't they dodgy as xxxx though? I mean if you're not criminal/greedy/irresponsible.
    - benj111 7y ago
      Define greedy and 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.
- NeedMoreTea 7y ago
  You want to be the next Nick Leeson then? (He who took down Barings)
lol768 7y ago
Overdrafts, interchange, reasonable fees (Monzo Plus, business accounts), commission (marketplace: savings accounts, insurance etc).
- benj111 7y ago
  I don't believe it offers most of those services, overdrafts in the UK are being restricted so be much less profitable [1], I believe one of its sell points is no commission on foreign currency, so no money there. So are they planning on launching (their own) savings, or insurance? [1] https://www.bbc.co.uk/news/business-48553193 https://www.bbc.co.uk/news/business-48553193
  - matthewmacleod 7y ago
    It offers literally all of those services.
    - benj111 7y ago
      Its savings products are other peoples, they are just a reseller. And the only insurance I've seen is travel insurance as part of a packaged bank account. Or did I miss something?
      - lol768 7y ago
        Yeah .. that's the entire premise of Monzo's marketplace concept. Really not sure what point you're trying to make here. 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.
  - lol768 7y ago
    >I don't believe it offers most of those services 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.
greysteil 7y ago
They're a bank. Banks have been profitable for hundreds of years. It's not the business model that's being innovated here, it's the execution.
- raesene9 7y ago
  yeah the question is though, can retail banking be profitable enough to satisfy VC like return levels... 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.
EnderMB 7y ago
Alongside the other posts, they also offer basic ISA's, albeit rebranded through another company. I imagine they take a small cut or affiliate fee through this, though.
yRetsyM 7y ago
They have a number of money making initiatives. As the see themselves as the "hub"[1] for your finances the biggest opportunities I think are probably outside of core lending functions. - 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/ https://monzo.com/annual-report/2018/ [2]: https://monzo.com/blog/2017/09/21/testing-energy-partnerships/ https://monzo.com/blog/2017/09/21/testing-energy-partnership... https://monzo.com/blog/2017/11/16/monzo-marketplace/ https://monzo.com/blog/2017/11/16/monzo-marketplace/ [3]: https://monzo.com/blog/2018/11/01/savings-pots/ https://monzo.com/blog/2018/11/01/savings-pots/ https://monzo.com/blog/2019/05/02/shawbrook-savings-pots/ https://monzo.com/blog/2019/05/02/shawbrook-savings-pots/ [4]: https://monzo.com/plus/ https://monzo.com/plus/ [5]: https://monzo.com/business/ https://monzo.com/business/ https://monzo.com/blog/2019/06/24/business-banking-update/ https://monzo.com/blog/2019/06/24/business-banking-update/
Timucin 7y ago
Apart from lending, they are also making the business accounts available for everyone bit by bit. There will be monthly fees for the business and plus accounts. 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.
jhuckestein 7y ago
hey, i work at monzo 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 :) [1] https://monzo.com/plus https://monzo.com/plus [2] https://monzo.com/features/savings/ https://monzo.com/features/savings/ [3] https://monzo.com/blog/2019/05/08/switch-energy-supplier-through-monzo/ https://monzo.com/blog/2019/05/08/switch-energy-supplier-thr...
- benj111 7y ago
  Thanks for your reply. 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.
- morrbo 7y ago
  Any plans to be able to hold money in a different currency like the Forex features of revolut? 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?
  - Matsta 7y ago
    I imagine they are doing a sort of soft launch. It sounds like Monzo has lots of features lined upcoming in the future. The die-hard Monzo fans will all sign up (and will give good feedback). 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.

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.
    - shawabawa3 7y ago
      oh, my bad, I didn't realise Monzo used a fixed fee. I'm glad they have to change that, that's payday-loan level APR for small overdraft balances I was thinking of Starling's overdraft (similar UK bank) which is 15% APR with no fixed fee
  - DanBC 7y ago
    Here's the link to the FCA press release: https://www.fca.org.uk/news/press-releases/fca-confirms-biggest-shake-up-overdraft-market https://www.fca.org.uk/news/press-releases/fca-confirms-bigg... > 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.

iamnotacrook 7y ago

Having millions of people lend you billions of pounds you can invest/trade short term is the sort of loss I want to get into!

benj111 7y ago
Yes, just like Lehman Brothers / Northern Rock.
- iamnotacrook 7y ago
  Weren't they dodgy as xxxx though? I mean if you're not criminal/greedy/irresponsible.
  - benj111 7y ago
    Define greedy and 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.
NeedMoreTea 7y ago
You want to be the next Nick Leeson then? (He who took down Barings)

lol768 7y ago

Overdrafts, interchange, reasonable fees (Monzo Plus, business accounts), commission (marketplace: savings accounts, insurance etc).

benj111 7y ago
I don't believe it offers most of those services, overdrafts in the UK are being restricted so be much less profitable [1], I believe one of its sell points is no commission on foreign currency, so no money there. So are they planning on launching (their own) savings, or insurance? [1] https://www.bbc.co.uk/news/business-48553193 https://www.bbc.co.uk/news/business-48553193
- matthewmacleod 7y ago
  It offers literally all of those services.
  - benj111 7y ago
    Its savings products are other peoples, they are just a reseller. And the only insurance I've seen is travel insurance as part of a packaged bank account. Or did I miss something?
    - lol768 7y ago
      Yeah .. that's the entire premise of Monzo's marketplace concept. Really not sure what point you're trying to make here. 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.
- lol768 7y ago
  >I don't believe it offers most of those services 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.

greysteil 7y ago

They're a bank. Banks have been profitable for hundreds of years. It's not the business model that's being innovated here, it's the execution.

raesene9 7y ago
yeah the question is though, can retail banking be profitable enough to satisfy VC like return levels... 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.

EnderMB 7y ago

Alongside the other posts, they also offer basic ISA's, albeit rebranded through another company. I imagine they take a small cut or affiliate fee through this, though.

yRetsyM 7y ago

They have a number of money making initiatives. As the see themselves as the "hub"[1] for your finances the biggest opportunities I think are probably outside of core lending functions. - 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/ https://monzo.com/annual-report/2018/ [2]: https://monzo.com/blog/2017/09/21/testing-energy-partnerships/ https://monzo.com/blog/2017/09/21/testing-energy-partnership... https://monzo.com/blog/2017/11/16/monzo-marketplace/ https://monzo.com/blog/2017/11/16/monzo-marketplace/ [3]: https://monzo.com/blog/2018/11/01/savings-pots/ https://monzo.com/blog/2018/11/01/savings-pots/ https://monzo.com/blog/2019/05/02/shawbrook-savings-pots/ https://monzo.com/blog/2019/05/02/shawbrook-savings-pots/ [4]: https://monzo.com/plus/ https://monzo.com/plus/ [5]: https://monzo.com/business/ https://monzo.com/business/ https://monzo.com/blog/2019/06/24/business-banking-update/ https://monzo.com/blog/2019/06/24/business-banking-update/

Timucin 7y ago

Apart from lending, they are also making the business accounts available for everyone bit by bit. There will be monthly fees for the business and plus accounts. 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.

jhuckestein 7y ago

hey, i work at monzo 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 :) [1] https://monzo.com/plus https://monzo.com/plus [2] https://monzo.com/features/savings/ https://monzo.com/features/savings/ [3] https://monzo.com/blog/2019/05/08/switch-energy-supplier-through-monzo/ https://monzo.com/blog/2019/05/08/switch-energy-supplier-thr...

benj111 7y ago
Thanks for your reply. 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.
morrbo 7y ago
Any plans to be able to hold money in a different currency like the Forex features of revolut? 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?
- Matsta 7y ago
  I imagine they are doing a sort of soft launch. It sounds like Monzo has lots of features lined upcoming in the future. The die-hard Monzo fans will all sign up (and will give good feedback). 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.