Monzo starts to pivot
By Teamspirit on Sunday, 22 October 2017
Monzo’s desire to shake up the banking industry is no secret. The company has made its name on harnessing modern technology to create a more customer-centric, user-friendly FS experience. But, as it moves from plucky disruptor to established player, it’s starting to face challenges to its core founding principles. Challenges of its own making.
With its user base growing at a rapacious rate, Monzo has decided that it can no longer swallow charges for international ATM cash withdrawals. So, from December customers will have to pay for them themselves.
True to the brand’s open style of communication, when it announced the removal of this free feature – which for many early adopters was a big draw – Monzo asked its customers which type of charging model they would prefer.
According to Monzo, 6,000 members of their online community responded, and chose a pricing structure similar to, but slightly more expensive, than similar services like Revolut. Monzo customers will be able to take out £200 a month internationally for free, then pay 3% on every withdrawal beyond that (Revolut charges 2% after a free £200).
Of course, Monzo may not consider companies like Revolut to be direct competitors. Where Revolut has baked global money transfer and access into their offering, for Monzo it’s simply a part of their larger mission, which include current accounts and beyond.
Up to now, Monzo’s early adopters have been happy with the incremental roll out of features across different platforms. But, with Monzo positioning the introduction of ATM charges as a way to move people over to its current accounts from their prepaid ones (prepaid account holders get a slightly worse deal on international withdrawals), it’s facing a number of challenges.
It needs to migrate the functionalities prepaid customers are used to over to the current accounts, and send out fresh cards to everyone, and get them to download new apps to access their new accounts.
It’s possible that the 19,000 people who have already signed up to the current account don’t mind this paradox of a service founded on simplicity becoming increasingly complex. But, it may be a harder sell for the more general consumer, even if it is only a temporal issue. And the brand may find itself facing stiff competition as more open banking services are launched, like Bud, which is being backed by HSBC and First Direct.
As one of the most exciting and ambitious names in finance at the moment, everyone from other disruptors to market leaders and customers of all stripes, will be watching extremely closely to see how Monzo navigates the coming months.
If your interested in learning more about how fintechs are engaging with customer wants and needs, come along to the breakfast seminar we’re hosting with the Financial Services Forum at Janus Henderson Investors on November 2nd – email email@example.com for more details.