App it. The future of banking
This morning I was having breakfast with a colleague. I paid the bill, and he sent me his share of the bill using our Monzo app. Before we’d walked out of the café, the money was in my account. Simple!
Like every industry, banking is going through major changes. We are part of a growing number of challenger banks disrupting the conventions that have long defined what a traditional bank does and how it operates.
We started Monzo because we felt that time was standing still in the banking industry. You can go to Google and ask, “Who was the president of Uzbekistan in 1837?” and you get a response in a split second, yet when you need a bank statement from five years ago and request it from your bank, you’ll probably have to wait a week to get it through the post. You might even get charged £20 for the privilege!
We thought we could do a better job – we wanted people to see Monzo as their best friend, their favourite app and their bank, all rolled into one. We refer to “bank account” and “bank” when we talk about what we’re doing, but, at the end of the day, we want to try and make the day-to-day managing of our customer’s money and all the things around that easier.
The journey began with an app, then we had a prepaid card, then with a banking licence comes the opportunity to offer a current account. Ultimately, we will understand and use all the data we gather (with our customers’ permission) to work out how they live their lives and whether they need help in other areas, from day-to-day budgeting to completing a tax return.
A customer might, for example, be interested in living in a particular house. Monzo could help work out the best way to finance that. Getting a mortgage is one option, rental is another, and then there may be some hybrid option where we pick the best of both. The mistake some banks have made is to try and sell customers a product, like a mortgage, rather than understanding their specific needs. We want our customers to feel that we’re looking out for them, helping them, keeping our eye on what’s going on and making life genuinely easier. Our journey is very much about finding solutions that are right for our customers. We concentrate on helping them look after their money by sourcing the right product, be it mortgage, rental agreement, credit card or loan. Our expertise is not around doing those things, it’s in finding the right one for them.
Since Monzo knows all about its customers, with their permission, we can broker their request and get them a good deal on insurance for however long they need it. We’re building a platform and a very strong relationship with our customers and our products and services. We refer to what we do at Monzo as “market place” banking, which crucially means that we are aligning our activities with the interests of our customer. Ultimately, a customer-centric model is what businesses need to succeed in today’s market.
Developing peer-to-peer (P2P) models or dynamic customer interfaces in the way that we have done may take years and millions of pounds of investment for the old guard in banking. Where we’re able to iteratively develop these systems, a few hours at a time, traditional banks face numerous challenges with bulky legacy systems weighing them down. Yet these are the challenges they must confront head-on if they are to keep up and avoid being seen as decaying infrastructure providers.
Who knows what will happen to the big banks with more challenger banks opening. Are the big banks going to vanish in the next six months? Of course not. Might they be around for the next 400 years? Maybe. What’s clear for us at Monzo is that banking is part of the journey. It’s not the destination.
The complexity of the new banking landscape brings together an eco-system of challenger and emergent banks, fintechs, as well as advisor organisations like Information Services Group (ISG) who are all contributing to bringing exciting new banking services to the UK. The only common definition of a bank is the fact you can take deposits – beyond that, the sky is the limit, so it’s an exciting time for challenger banks.
We have the opportunity to be up there with the likes of Amazon, Uber and Google – and that’s just where we at Monzo intend to be.
Paul Rippon, deputy CEO, Monzo