British startup bank Monzo has doubled in value since February this year and increased their customer base from 120,000 to 470,000 in the same period. Monzo launched as a card-only service back in October 2015 and only received a banking license in April 2016.
Monzo has been financed by various City investment firms and venture capital organisations, but they have also raised money using crowdfunding – essentially asking customers and fans of the brand to put money into the company. In March last year they raised £1m for the company in 96 seconds with a crowdfunding campaign – that is the fastest crowdfunding campaign in history.
Monzo isn’t making any money yet. Using traditional financial measures of success it’s a small startup that is still struggling to make any returns for investors, but this company is quite different to most in the financial services sector. It’s the first time I have ever seen a finance company called ‘cool’ by a large number of customers. They are taking on so many new customers, they cannot cope with the demand. About 25,000 are on a waiting list at present.
What makes this bank different? They don’t have any branches and all services are managed between a card and app. The difference is that this is a bank that revolves completely around the customer. It’s not a traditional bank that is aiming to improve their customer service function. This service was designed with the needs of the customer as the core of what they do.
The CEO, Tom Blomfield, doesn’t even talk about Monzo as a bank, he calls it a control hub for all your financial arrangements. Blomfield fully expects it to mature into a service that controls how you spend your money – warning if you are eating out too often for example – and switching you to the best value electricity provider automatically.
Not all the promised functionality is there yet, but the spending controls are and this functionality is wildly popular with millennial users who sometimes find it difficult to keep track of a traditional current account if payments take several days to arrive in the account. Monzo keeps track of all your spending, categorises it instantly and the app can provide insight into what you have in your account in real-time.
Blomfield isn’t restricting his vision to the UK alone. He says that he wants to have a billion users on the system, which is an ambition far beyond even the largest of British banks. What is important to note about his vision and the Monzo approach though is that they have not asked, how can we put a bank account on an app? They have asked people, what are the problems you have keeping a control on your spending and getting the best deals from utilities and service providers?
I don’t know if Monzo will succeed, but they are off to a good start. This customer-centric approach is how many of the success stories of the future are going to start out. Build your business around services that customer wants today, not how your industry functioned in the past. Can Monzo be the future of banking? Let me know your thoughts by leaving a comment here, or get in touch on LinkedIn.