INSIGHT

DISRUPTOR 10: Monzo

Coining a new type of bank

The Virgin Media Business Disruptors to Watch 10 list, in conjunction with Fast Track 100, is back.

In a climate of ‘disrupt or be disrupted’, we’re determined to help businesses triumph, and our leading-edge research and round-up of 10 of the UK’s most disruptive companies provides much-needed insight into how it’s done.

We’ve spoken to the movers and shakers in our 10 finalists to find out what makes them tick. And in this instalment, we learn that while nifty bells and whistles are well and good, technology that achieves something actually useful is enough to disrupt a market. Step up Monzo…

It’s the must-have bank account for any self-respecting millennial, but Monzo doesn’t just offer user-friendly, smartphone-only banking.

Customers also get to own a highly prised Monzo card in blindingly bright ‘coral’ - pinkish for anyone struggling. Naturally the neon cards are a purposeful ploy to show, from the off, that this is a bank that does things differently.

Co-founder and CEO Tom Blomfeld says, “The bright coral-coloured cards really start a conversation. You’re in a bar and someone goes, ‘Oh I’ve got one too.’ They’re getting us noticed.”

For people who live on smartphones

After Monzo launched a limited supply of pre-paid cards earlier this year, they became something of a cult item with hundreds of bright young things clamouring to get their hands on them. Now Monzo has 450,000 existing users, with a waiting list of over 50,000. And Tom isn’t surprised that the idea of a smartphone-only account has struck such a chord.

He says, “Monzo is a new bank for anyone who lives on their smartphone. We started it because we were frustrated with our traditional banks. I use apps like Amazon, WhatsApp, Citymapper and Uber every day. They understand the way I live my life, and make it easier. My banks were just frustrating and annoying.

 “We wanted to make something that would make our lives and the lives of our friends and families easier. It turns out that works for hundreds of thousands of people.”

Visibility and control

The firm hopes that most of the pre-paid card users will migrate to the full current account when they are offered the opportunity in the coming weeks. Monzo’s accounts boast features such as real-time spending notifications, balance updates and budgeting tools. However, Tom feels the bank’s launch has been a roaring success for one key reason:

“The biggest piece of feedback we’re getting is that Monzo gives people visibility and control. Money is, for most people, what causes anxiety and frustration. With Monzo it is just simple; it works. People understand where they are and feel more at ease.

“Of course, the technology has played a big role in our success. Large banks are hamstrung by their technology. They’ve grown like Frankenstein’s monster by bolting systems together. If you’re starting from scratch, you can create something that works for users.”

One million customers

Unsurprisingly for a startup that has grown so fast, Monzo has big plans for the future:

“The focus for the next three to four months is upgrading everyone on to the current account. We started with a prepaid card, so moving people on to the full bank account is really important. Then getting to a million customers, which we should do shortly afterwards; then getting to break even and building a profitable business, not just a fast-growing app.”

As consumers grow more and more comfortable with contactless payments, the cashless society long envisaged by futurologists seems to draw closer than ever. For Tom the reason is simple: ultimately consumers benefit from going cash-free.

Tom says, “I think the use of cash will decline over time. The biggest thing you lose with a cash payment is a ton of valuable data. For example, you don’t know how much you are spending on eating out, versus transport. I think as people come to realise the benefits of that, they will move away more and more from cash, which also costs a lot of money.

“Consumers don’t bear such cost directly, so they don’t really see it. But moving those grubby bits of paper around the country costs a ton and it’s a big security risk because you can literally steal it. A move to digital is much safer for everyone.”

Hire smart, ambitious people

As Monzo continues its impressive assault on the staid banking industry, what advice would Tom give to any would-be disruptors?

“Not everything new is disruptive,” he says. “It’s not about making incremental improvements. It is about upending the way an industry works, ideally for the benefit of consumers. So get started and jump in, even if you’ve not thought it all out. A lot of people get paralysed overthinking a problem.

“Secondly, there is a real benefit to going after impossibly large problems, because then the smartest, most ambitious people will want to join you. If you really tackle something huge, you will find you get to work with the best people.”

We wish Tom and the rest of the Monzo team all the best as they continue their disruptive journey.

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