Monzo is the big-daddy of challenger banks, now valued at £2 billion after several rounds of funding. Started back in 2016, it’s old for this game, and already has two million users with expansion plans for the US. That’s a long way from its first product, a pre-paid credit card that was popular as it didn’t charge to take cash out of overseas ATMs.
In 2017, it started offering current accounts, with an app to let the smartphone generation do all their banking without stepping into a branch. Since then, it’s added overdrafts, joint accounts, third-party app integration and now loans, all while keeping the bright coral card that was initially only supposed to be a prototype, but turned into a piece of marketing magic.
CEO Tom Blomfield has previous banking experience — he came from rival Starling, founded by former boss Anne Boden. There’s now either a friendly rivalry or a bitter feud between the two, depending on who you choose to believe.
Boden infamously pranked her former colleague when Blomfield was forced to change the name of his own startup from its original Mondo, swapping the letter following a trademark challenge. Boden snapped up the Monzo domain name, leaving a message congratulating Blomfield on the rebrand and advertising her own Starling. Blomfield says he welcomes the competition, saying it shows the health of the European fintech sector – and that’s helped his company raise the funds to see it become one of the UK’s tech unicorns.
As the UK’s big challenger banks – Monzo, Revolut, Starling and N26 – continue to grow in popularity, we’re reviewing the services they provide to bring you a comprehensive view of their usability. This includes their features, account types and security practices.
Monzo Consumer Accounts
Handy, thoughtful features you never knew you needed are Monzo’s raison d’etre. Make a payment, get an instant notification. Set up a joint account in a few taps. Split a bill and send a demand for instant payment. Pay anyone instantly, even if they aren’t on Monzo. Snap a photo of a receipt to attach it to spending. Missing cards can be frozen in-app, with a replacement easily ordered — that’s standard across the challenger banks. Monzo can also block gambling transactions, to help create friction for those with addictions.
Spending is tracked and categorised automatically – although not always perfectly accurately – for easy budgeting and a monthly summary of where your money goes, and you’ll be warned if you’re likely to run out of money before the end of the month. That latter tool handily includes regular subscription payments, such as Netflix.
Want to save a bit of cash? An easy budget builder sets targets for spending in specific categories, so you’ll know if you’ve blown too much cash on shopping or eating out. Plus, you can set up a separate savings pot. This can simply be a spot where you set aside extra cash, or can be a savings account with higher interest or an easy-access ISA. These pots can collect “round ups”: every time you use your card, Monzo rounds up the spend to the nearest pound, dumping the spare change equivalent into your savings pot – a handy way to save a bit extra without effort. If you need extra cash, Monzo offers a simplified overdraft; it’s free for the first £20, and then 50p a day regardless of how much up to £1,000 you’ve borrowed. Need a bit more? Apply for a loan from £200 to £15,000.
More features are in the works, and handily Monzo’s road map is public via a Trello board, where you can make requests and discuss them with developers. Or, build your own personalised features thanks to integration with IFTTT (If This Then That), which lets you programme your Monzo account with triggers — whenever it rains, dump a fiver into a holiday fund; when your team scores, add cash into a celebratory fund; order from Deliveroo, charge yourself a fast-food tax. Third-party tools such as spending tracker Emma and receipt scanner-cum-rewards card Flux can also be added.
What can’t it do? International payments. Money can be sent via TransferWise, but not yet received directly; you can still withdraw from that service into your Monzo, just as you would any bank account. Monzo also doesn’t support IBAN or SWIFT, which is a pain if you’re being paid by an overseas friend or client.
And, be aware that Monzo doesn’t pay interest rates on its standard accounts, and the interest paid in the OakNorth ISA offered via Monzo is less than if you went directly with the provider – such is the cost of convenience. The same follows for its loans: for smaller amounts, Monzo may well be the best offer, but if you’re borrowing £5,000, Monzo’s minimum rate of 6 per cent is almost double that of standard lenders, so it’s worth shopping around.
Monzo recently added a premium version. Monzo Plus starts from £6 a month, offering a choice of card colours for those tired of “hot coral”, a 1.5 per cent interest rate, and discounts and offers, such as 10 per cent off HelloFresh, for example. In the future, for a few pounds extra a month, Plus users will be able to add travel insurance and home contents insurance. The app, like other challenges, is trying to tackle all your financial needs in one place.
Monzo Business Accounts
Monzo’s business accounts are in beta with a waiting list to join. Alongside the consumer features, such as saving “Pots”, instant notifications and receipt scanning, the business version already offers accountancy tools from Xero and FreeAgent. You can also add read-only access to key staff such as accountants and directors.
For the business account this year, Monzo’s promising a rules-based system to put money aside to pay taxes, international payments, batch payments, receipt scanning, and asking for payments via a “Monzo.me” link. If there’s another feature you desperately need to run your business, that Trello board means you can make a request of the developers.
If you want to build the perfect business bank for yourself, get in on the ground floor and start making requests for features. If you want a business account that’s already fully featured, you may have a longer wait if you want to used Monzo.
How good is the Monzo app?
Think back to what banking apps were like two or three years ago, and Monzo’s app is a revelation — fully featured and simple to use. That said, there are a few minor complaints. The app is full of charts and analytics, and along with all those features, the chaos can sometimes make it a pain to find what you’re looking for. That’s especially true with dual-account holders; your personal account and joint account look nigh-on identical, so it’s easy to get confused about which you’re looking at.
It remains unclear how to find and add third-party apps such as Flux; that appears to be done via the third-party app, and there’s no obvious in-Monzo list for you to browse. Monzo has also started monetising its app, meaning you’ll get ads from energy providers and the like with cashback or discounts if you switch. If you’re not keen on the existing app design, you can flip to the next version in Monzo Labs, under Settings in your Profile.
- Monzo fees explained
- The standard Monzo account has no monthly fees. The bank used to offer free cash withdrawals when abroad; that’s now limited to £200 every 30 days, with a 3% charge after that’s exceeded. Monzo Plus starts from £6 a month, with additional charges from £4 monthly for insurance and other add-ons.
The company was recently hit with a serious security breach, with half a million of its customers forced to reset their Monzo PINs after it was revealed they were held insecurely. But it’s not all bad news. Monzo uses AI and analytics to watch for fraud, and it appears to work: in June 2018, Monzo’s in-house fraud analysts noticed odd activity; after investigation, the bank publicly announced the Ticketmaster data breach before the ticket site acknowledged it.
Monzo is protected by the Financial Services Compensation Scheme, so your funds are protected up to £85,000, if you’re lucky enough to have that much stashed away. That scheme also protects customers if Monzo goes bankrupt.
For users, Monzo’s instant notifications means you’ll know if someone has nicked your card and used it; you can then immediately block the card in the app, and unfreeze it if you were mistaken or find a missing card. For online shopping, with some sites the Monzo app acts as two-factor authentication; during the purchase, you’ll be asked to tap an approval notification to ensure it’s really you using the card. The magstripe on the card is disabled by default for ATM withdrawals, but can be turned on in-app if needed. iPhone users have an extra level of security using location. If the card is used overseas but your phone is at home, the payment will be blocked.
If you’re frustrated by slow payments and would rather not step foot in a bank branch, Monzo may be the bank for you. Its features and tools are consumer-focused, and should help you manage your money more precisely. Monzo’s challenge will be convincing users to ditch the traditional banks and get their salaries paid in, rather than treat the account like a pre-paid credit card for spending only.
That will be increasingly difficult as traditional banks slowly improve their own apps, reducing the reason to make the switch. But if you want to know what everyone else’s accounts and apps will look like in a few years, and help build it via the community forums and feedback, Monzo is the bank for you.
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