
Y Combinator’s growth fund to back challenger bank Monzo - Peroni
https://techcrunch.com/2019/04/08/monzo-mystery-investor/
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spking
Monzo, Revolut and N26 (backed by Peter Thiel) are all splashing down around
the same time in the U.S. to vie for the Challenger/Neo-Bank crown, where they
will compete with:

-Simple/BBVA ([https://www.simple.com/](https://www.simple.com/))

-Varo ([https://www.varomoney.com/](https://www.varomoney.com/))

-Qapital ([https://www.qapital.com/](https://www.qapital.com/))

-Aspiration ([https://www.aspiration.com/](https://www.aspiration.com/))

-Empower ([https://empower.me/](https://empower.me/))

-MoneyLion ([https://www.moneylion.com/](https://www.moneylion.com/))

-Acorns (Spend) ([https://www.acorns.com/spend/](https://www.acorns.com/spend/))

-Chime ([https://www.chimebank.com](https://www.chimebank.com))

-Zero ([https://zero.app/](https://zero.app/))

-Point ([https://trypointbank.com/](https://trypointbank.com/))

-Finn/Chase ([https://www.chase.com/personal/finnbank](https://www.chase.com/personal/finnbank))

-Marcus/Goldman Sachs ([https://www.marcus.com/](https://www.marcus.com/))

-Greenhouse/Wells Fargo ([https://www.wellsfargo.com/greenhouse/](https://www.wellsfargo.com/greenhouse/))

-GoBank/Green Dot ([https://www.gobank.com/](https://www.gobank.com/))

-Square (Cash) ([https://cash.app/](https://cash.app/))

-PayPal

-Apple ([https://www.apple.com/apple-card/](https://www.apple.com/apple-card/))

-(Maybe Amazon soon)?

(edit: links)

~~~
jcrben
All those options, and I still can't find a US bank with an API.

~~~
Spinosaurus
What would you do with an API that can't already be done? I understand the
hesitancy of giving a third party such as Plaid your bank credentials, however
an exposed API to your bank seems to be a rather niche need.

As an example, Monzo was quite outspoken about their API at first, but it has
since taken a backseat, presumably because they didn't see a huge need for it.

~~~
lol768
>As an example, Monzo was quite outspoken about their API at first, but it has
since taken a backseat, presumably because they didn't see a huge need for it.

You're not wrong.. but it's still very much functional and has received some
recent additions (receipt API). I do wish they'd do more with it, though. I
suspect the problem is that most customers just don't care.

The internal API is fairly trivial to begin using, if necessary.

~~~
sjtgraham
> I suspect the problem is that most customers just don't care.

IMO the reason is they (perfectly rationally) realised after spending several
million building an authorised bank that APIs are a pure downside scenario for
them, i.e. intermediation risk. Why spend so much money to stand up a de novo
bank and let everyone else capture the value? 99% of the value is top of
stack. This is why no market in the world has provided 1st party banking APIs
for retail products. It's taken regulators to do so in Europe and the results
of that (predictably) fell short of what everybody had hoped. No criticism of
Monzo for this. Based on their incentives this was the rational course of
action.

~~~
lol768
You have a point, and I agree OB has been disappointing. I think there's a
middle ground where you offer something that still provides value for personal
use, attracts potential patnerships (see Flux) but doesn't give away the "keys
to the kingdom" so others can profit off of your work without you, as a bank,
benefitting from building the platform in the first place.

I suspect there are is a decent number of 'techies' and early adopters who
found Monzo's API, despite its limitations, attractive to them. I've used it
to save myself a bunch of time with expenses and it's nice to know that, if I
wanted to, I could use the internal API too.

In its current state, Monzo could easily expand the existing personal API
(which deliberately doesn't allow you to scale - only whitelisted user IDs can
use your OAuth client) whilst minimising intermediation risk, provided that
they didn't add the same endpoints to AISP API.

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westiseast
What shocks me about this is... Monzo to me (a regular user of about a year)
is just a normal bank card without a branch and with a basic app.

Are established banks so incredibly ossified they can’t keep up with that?

~~~
noneeeed
As someone with a Monzo account, but whose main accounts are with Barclays and
Nationwide, I find the hype around the "challenger banks" in the UK a bit
unexpected. I'm not really sure I understand what they are offering that is so
revolutionary. I still think it's great they exist as competition is overdue
in the UK banking sector, and I hope they do well.

I find Monzo works well for what I use it for, which is tracking my daily
small item spending (getting lunch, buying a coffee etc), while the Barclays
and Natwest apps work well for the "grown-up" banking. Between the latter two
I have 4 bank accounts, two credit cards and two mortgages, and the apps
(combined with Faster Payment's awesome transfer time) make it ridiculously
easy to manage my finances.

Monzo app is definitely very nicely done, and there are some neat features,
but for my day-to-day banking I have absolutely no issue getting everything
done with the Barclays and Nationwide apps. Both could do with a bit of UX
work and decluttering, but they are perfectly fine.

Are the rest of the main banks just really awful compared with Barclays and
Nationwide?

~~~
westiseast
Agreed.

I have a fancy colored debit card now, which is cool.

Tend to use my HSBC for direct debits and bills, and Monzo for daily
life/luxury/fun items.

It just seems like the legacy banks are awful rather than Monzo is breaking
boundaries. I have a Chinese bank card and I get opt-in text notifications for
my spending and have done for years.

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twic
Just imagine how many more microservices they'll be able to deploy now!

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cm2012
I use Azlo for business checking, very happy with them so far. I think they
are backed by BBVA.

Best thing is I could sign up online without ever having to go to a branch. I
think they are the only business checking account that allows that.

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writepub
From October 2018 to April 2019, what exactly changed with Monzo? If you were
to objectively take the 2X-ing of valuation, you'd assume their revenues and
profits (if any) doubled in that time frame.

Hard to believe doubling of real KPIs (like GAAP revenues) in 6 months, I hope
YC isn't contributing to the unreasonable doubling of valuation without actual
KPI changes.

~~~
Peroni
The timing of this funding round is also the biggest surprise for me. Their
last round was in November last year and they raised a significant amount of
money. It's genuinely taken me aback that five months later they are raising
funding again.

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tmp12938
Really interesting to see the re-rise of challenger banks. IIRC Simple was one
of the first and did OK never hit the valuation that these new ones are
getting.

My hunch is that these are doing comparatively better outside the US because
basic banking elsewhere is relatively worse than here. In my experience with
at least Chase and Capital One the "big banks" have invested pretty heavily in
their UI/UX and I haven't had any issues getting CX questions answered when I
need to.

~~~
shafyy
Banking in the US is definitely worse than banking in Europe. People still use
checks, are you kidding me?

~~~
davidmr
I just moved from the USA to the UK. It was shocking how much better the
consumer banking system is here.

With 10 seconds of typing on my phone, I set up my standing rent payment to my
landlord (which would have been too much money to use Chase's QuickPay at
home). I gave my gym and utilities my account number and sort code and they
can (with my permission, which I can revoke any time without talking to them)
bill me regularly. I recorded a little video of me holding my passport and a
scan of it, and that was sufficient ID for them to give me a new account. For
everything under £30, I just tap my wallet on the little terminal. For
everything over, they bring a terminal to me and I type my PIN. I never have
to give up my card to anyone for any reason.

It's a pretty low bar to get over, but Monzo is definitely the best bank I've
ever had. The US consumer banking system sucks by comparison.

~~~
CaptainMarvel
Just to distinguish Monzo from all other banks: "I recorded a little video of
me holding my passport and a scan of it, and that was sufficient ID for them
to give me a new account." Everything else is standard for all banks in the
UK.

~~~
glitchcrab
I've worked for a major UK bank on the branch side and I also interviewed at
Monzo a couple of months back on the platform side - their verification
process satisfies KYC requirements but it feels so modern in comparison to
existing banks.

Back at my previous bank they're still taking copies of ID and sending them
off to a central location to be re-digitised.

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dwighttk
what is a challenger bank?

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okmokmz
[https://en.wikipedia.org/wiki/Challenger_bank](https://en.wikipedia.org/wiki/Challenger_bank)

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mattnewton
I wonder who the initial sponsorship bank is. I imagine any very large bank is
going to see the kinds of differentiators that Monzo is offering (whatever
they will be) as things they should just clone, rather than grow a partnership
with a competitor over, but I really have no idea how this industry works.
Anyone have insight from the peanut gallery?

~~~
londons_explore
Barclays

