Monzo, the British mobile bank, announced on June 14th that it would launch its “Bank of the Future” service in the US. Monzo has a market capitalisation of more than $1bn and a growing customer base in the UK, which recently topped 2.2m. Monzo was founded in 2015, and in October 2018 it announced that it had raised £85 million in financing, making it a unicorn (a company valued at more than $1 billion).
Unlike traditional banks, Monzo operates only on iOS and Android through apps, and there is no physical banking. The company describes itself as the “bank of the future”.
Monzo grew quickly in the UK by focusing on functions that no other big UK bank could offer. Monzo’s appeal has always been customer service and focusing on the community through live events. Hundreds of people took part in events in the UK to share their thoughts with the Monzo team. Monzo now plans to launch its bank cards in the U.S. and get direct feedback with similar events in Los Angeles, New York and San Francisco in the coming weeks.
Since Monzo does not have its own U.S. bank license, the features will vary slightly. “The main thing that’s going to be cancelled is the loan,” Blomfield said. “We’re not a bank in the U.S., so we don’t lend to our customers. “Most of the existing Monzo features will be available in the U.S., including pay notifications and pay-per-click.
Monzo’s business model requires users to use Monzo accounts as their main bank account to make money from them. This business model requires collecting a large number of users’ data to recommend the right products or services from each provider and charge a commission accordingly.
Monzo makes money in the UK through services on your bank account, such as selling insurance or collecting fees from overdrafts. It is unclear which services will be available in the us, and it appears the company is still working out the details as it rolls out CARDS and gets feedback.
More details will be available on Monzo’s U.S. website. Monzo is also looking for feedback from potential customers on information such as cash deposits, credit cards and check deposits, which are not initially supported. Users must transfer their salary to the Monzo account from another U.S. bank account or to the Monzo account.
All Monzo CARDS will be available via Tap to Pay (contactless) when released in the U.S., which is important in a market lacking CARDS that support this modern payment method. The UK has been using contactless CARDS for years, but according to AT Kearney’s 2018 report, only 3% of us CARDS are contactless, compared with 64% in the UK.
Unfortunately, When Monzo launches in the US, it won’t get the support of Apple Pay or Google Pay as it did in the U.K., but the company hopes to add it in the future. Monzo does not charge for expenses or withdrawals on the card, and there is no overdraft fee in the United States. If the user starts using the card abroad, the exchange rate will not be marked, and $200 per month will be free of charge, with a 3% charge in excess.
Although Monzo thrives in the UK’s vibrant fintech sector, it faces different challenges in the US. Simple may be the closest thing in the us to Monzo in terms of mobile banking, but its acquisition by BBVA has not had much impact on the complex us market, which still relies on cash for many deals. Monzo now needs to understand state and federal regulations and try to get a U.S. banking license so it can really move forward with its plans.