
Y Combinator invests in Monzo through its Continuity Fund - satchet
https://www.cnbc.com/2019/06/24/monzo-doubles-valuation-to-2point5-billion-with-y-combinator-led-funding.html
======
matthewmacleod
I know there's a bit of scepticism about Monzo in particular, but here's the
deal from my perspective as a customer and crowdfunder: it's a straightforward
banking service, and has a great app (which is where I do basically all
banking anyway). That's basically it. Fee-free foreign transactions are a nice
positive too, though I'm not that bothered.

Some of the larger banks have begun introducing features to compete – stuff
like being able to freeze and re-order cards. So that's good. At the point it
was introduced though, the experience was notably better than any other
option.

For me as a customer, the main goal of a retail bank is to store my cash, make
it accessible, keep it secure, and notify me about transactions – basically,
keep out of the way as much as possible. It's good at that, better than any
other bank I've used, and I think that simplicity is underrated.

~~~
samwhiteUK
Bingo.

The fact that I can see all my transactions, automatically categorised, in an
app that is much prettier, full-featured and simple than the crap that Halifax
put out, is brilliant.

Combine that with a simple setup process, never having to interact with humans
or call centres, and add tha bility to automatically save, interact with IFTTT
etc and you have a very compelling package and I hope they continue to do well

~~~
cameronbrown
> never having to interact with humans or call centres

Many people would argue this is a tech company's biggest flaw.

~~~
Balero
Never having to??

I can understand "never being able to" being a flaw. But if I can get my stuff
done without talking to someone then that is brilliant. I don't have to go out
of my way to go somewhere, I don't have to bother with a bad phone reception,
I don't have to wait in a line for it to be my turn. I just do the things I
need to do when it is convenient for me.

If I want to open a savings "pot" (Monzo version of a savings account). Then I
can do it on the bus on the way to work. I don't have to take time off to go
to a branch, or prove I am me on a phone call etc. I just use the app, and
it's all done.

~~~
cameronbrown
All I'm saying is they're less likely to invest in good customer service
infrastructure if it never 'needs' to be used. There's always the possibility
that something unaccounted will go wrong.

------
RickS
I'm very hopeful for Monzo, with some caveats.

They have a lot of fascinating and useful DNA having gotten started in the UK
before the US. The UK's regulatory environment for digital banking is leagues
ahead of America's, w/r/t data access, APIs, etc. If they can persist UK style
data features through their American rollout, they'll have something no other
American bank currently offers.

While my strong suspicion is that the UK's push for digitization /
interoperability in the financial sector stems from Orwellian nanny-state
ambitions that would be right at home in China's playbook, it would be
fantastic if we could somehow manage to empower customers with access to their
own information without similarly empowering data-thirsty governments to
surveil and oppress.

The scary parts are probably going make headway regardless, so cheers to the
silver lining in the interim.

~~~
randomvectors
This is where they actually bring value right? - Delivering a good banking
product outside of the UK.

Because as a UK customer I see no reason to switch after trying Monzo for a
couple of months.

Positives:

\- a nicer mobile banking app

Negatives:

\- no credit cards and no option to top up using a credit card from another
bank

\- no physical branches

Everything else is comparable to most other banks in the UK. Which isn't bad,
just nothing worth switching banks for.

~~~
Liquid_Fire
For me the killer feature is foreign currency transactions with no fees at the
MasterCard exchange rate, both online and abroad. My "traditional" bank
charges me a flat fee _and_ a percentage for any transactions in other
currencies.

~~~
sambe
I don't know what the MasterCard exchange rate is. However, someone recently
told me regarding their credit card: "they give me the wholesale exchange
rate, which is great". It turned out not to be so great (~1% wide market).
It's good not to pay an additional fee/spread on top, but it can still be a
poor deal overall.

~~~
Jonnax
This is their convertor below.

$10000 dollars cost £7,867.91

I googled $100 USD to GBP and it comes out as: £7,859.50

Percentage difference: 0.106947%

[https://www.mastercard.co.uk/en-gb/consumers/get-
support/con...](https://www.mastercard.co.uk/en-gb/consumers/get-
support/convert-currency.html)

~~~
sambe
Google isn’t really an authority. The Google rate could be bad and MasterCard
0.1% worse. They could be from different times. Also, the MasterCard site says
indicative only - if I convert the amount back again, MasterCard claims they
are giving me free money.

GBPUSD spot is 0.002% wide (so you’d expect to pay ~0.001% for a single,
instant transaction up to several million). It’s not actually too difficult to
access this through a brokerage.

That said, if you could really get 0.1% from them it’d probably be considered
good at retail.

------
lordnacho
The UK bank space could do with some fresh players. Currently I'm looking for
a new bank for my business, because:

1) I need to have foreign currency accounts. My bank has them, but I'm unable
to see the accounts when I log in. They've known about this for 4 months now,
and I keep getting sent in circles by the Indian call centre. They've sent me
to branch twice, with no coordination, the people in the branch can't help me
either.

2) I need to have an end-of-year statement for my taxes. It seems someone
messed up the SQL or something, because I have statements for every month,
except the end of the year. They haven't fixed this either.

So I've started looking around for other banks, but most of the challenger
banks don't do multi currency accounts.

I'm in the market for a new personal account as well. Revolut works just fine
technically, but I don't like what's being said about them and I'd rather not
support them now.

It would be nice to have business and personal together, but that seems hard
to find among the challenger banks, since they seem to not do FX. (I've
emailed several over the past week.)

Lastly TransferWise does Borderless, which seems like exactly what I need, but
it seems to not be a real bank account. Certain online businesses require
withdrawals to be to someone (or a business) whose name matches what they have
as their account details, and that doesn't work with their scheme.

~~~
Scirra_Tom
We use Barclays and have EUR and USD accounts with them which we can see
online and make transfers/payments online with. Allows us to have a USD Amex,
and do a lot of our Forex with Transferwise. Saved tens of thousands over the
years on Forex with this method, and expensing some of our USD infrastructure
costs on Amex helps as well.

Last pain point for us is getting a USD account in USA so we can cashout
Paypal USD balances. Found companies that promise ability to do this but after
wasting lots of time turns out they can't.

~~~
martinald
Transferwise can give you a US ACH account with a USD balance which you can
then convert and send. Not sure if that helps?

~~~
Scirra_Tom
Paypal need a USD account in USA, with a bank statement from said account
showing your business name. I don't think that would do it.

~~~
martinald
Seems that it works. It is a USD bank.

[https://www.icomparefx.com/how-to-send-money-from-paypal-
to-...](https://www.icomparefx.com/how-to-send-money-from-paypal-to-
transferwise/)

~~~
Scirra_Tom
We have a business account - there is no ability to add USD account without
having to go through support who require bank statements unfortunately.

------
hakanensari
Not to be dismissive, but would these challenger banks (Monzo, Revolut, N26,
TransferWise) survive once the regular banks and AmEx stop adding fees on top
of foreign-currency charges and withdrawals? I personally don't see any other
differentiating factor, and frankly, maintaining multiple cards and having to
top up, etc. are a hassle.

~~~
OJFord
> maintaining multiple cards and having to top up, etc. are a hassle.

So don't do that?

I think I still have a 'regular bank' account open, but I don't use it at all.
Salary goes into Monzo, and payments go out. It's the only debit card in my
wallet and that I use.

~~~
hakanensari
> So don't do that?

I didn't switch wholesale because I'm not fully convinced. I feel these new
banks and bank-like offers will for some time search for a right fit and may
change or disappear in the next few years.

Also, no-fees-abroad is a great feature, but perhaps not the 10x to spur (my)
wholesale adoption.

Maybe I'm just not an early adopter (although I use them abroad, so in a way,
I am).

~~~
dbbk
I have a standing order that just moves £200 into Monzo every Friday for
regular spending money. Makes it a lot simpler.

------
benj111
What's it's plan for making money.

As I understood it current (checking) accounts don't really make any money,
they're just used as loss leaders to lure in customers.

~~~
jhuckestein
hey, i work at monzo

we're currently making money from interest charged on loans that we make to
our customers, from interest that the central bank pays us on our deposits, as
well as from interchange that we earn when our cards are used. this is what
most banks do (except they also make lots of money from fees that we don't
have)

there are several other ways we'll make money and we just started
experimenting with a few of them. we launched a premium account that charges a
monthly fee [1], we operate a savings marketplace in which we earn a
commission [2] and we help people switch their bills to a cheaper provider if
they are currently overpaying [3]

we release our financial statements every year and new ones are coming out
soon. feel free to have a dig then :)

[1] [https://monzo.com/plus](https://monzo.com/plus)

[2] [https://monzo.com/features/savings/](https://monzo.com/features/savings/)

[3] [https://monzo.com/blog/2019/05/08/switch-energy-supplier-
thr...](https://monzo.com/blog/2019/05/08/switch-energy-supplier-through-
monzo/)

~~~
morrbo
Any plans to be able to hold money in a different currency like the Forex
features of revolut?

On another note, I love monzo and do use it, and don't want to offend but I
just had a look at the monzo plus offering and it's a bit crap. A different
colour card and (later this year, and not specified) interest on your account?

~~~
Matsta
I imagine they are doing a sort of soft launch. It sounds like Monzo has lots
of features lined upcoming in the future. The die-hard Monzo fans will all
sign up (and will give good feedback).

A soft launch is a better idea compared to other companies launching new
premium products, like the CityMapper Travel Pass, which is more like an Alpha
than anything, and there have been lots of issues from the get-go.

------
astannard
I do like Monzo, they are one of the few startups I have invested in. I tend
to personally use them for my fun money and still use my long time bank for
paying the bills and getting my wages etc I transfer my monthly spending money
to Monzo and when that runs out the fun stops.

~~~
mojuba
Same here. Something still prevents me from taking Monzo and similar banks
seriously and manage my entire income on their accounts, though can't say what
it is.

Maybe it's the "you can't possibly trust a bank that's not even profitable"
despite all the effort of cutting costs, e.g. no walk-in offices and so on.
That, coupled with being "ethical" as a selling point somehow doesn't sound
great in the context of banking.

~~~
astannard
Yes, I think when I feel comfortable that they will stick around I will feel
comfortable with putting my wages in.

------
bleigh0
Congrats to Tom and the Monzo team. I've had an account since the days of
'Mondo', and the focus on user experience and trust has endured (and if
anything maybe increased).

------
syx
I just found out about Monzo yesterday when I read an article regarding poor
quality of Revolut customer service [1]. This banking app looks very
promising, I would really like to try it but I'm in Dublin Ireland and here
Revolut is basically the de facto of banking apps. How will they deal with
this sort of competition?

[1]
[https://news.ycombinator.com/item?id=20261823](https://news.ycombinator.com/item?id=20261823)

~~~
dunk010
That's a terrifying story in that link :-|

~~~
syx
I know that's why I'm currently looking for a better alternative, but if no
one uses Monzo here, I don't really see a reason to switch.

~~~
secfirstmd
Dublin based here also. Agreed on Revolut, they have the best app in my
opinion but I just recently signed up to n26 as they are a more solid company.

------
dazbradbury
Big congrats to Monzo, and I can't wait to see what their marketplace looks
like when it's finally fleshed out.

What's the state of account switching in the US? I'd have thought a big part
of Monzo's strength in the UK is the mandated account switching service:

[https://www.currentaccountswitch.co.uk/](https://www.currentaccountswitch.co.uk/)

Is there an equivalent system in the US to reduce the friction of switching
banks?

~~~
obeattie
I don't think an equivalent of the Current Account Switch Service exists in
the US, which is a shame.

But I don't think this is crucial. We had around 5,500 switches via the
Current Account Switch Service in May, but added around 200,000 new customers.

~~~
silasdavis
It's unfortunate that the fully automated service requires you to close your
the source account completely when switching. I was about to push the button
on getting my salary paid into my monzo account but a diversity of current
accounts has its uses.

I think the justification for only providing switch and close was that it was
the only way to reliably avoid double payments IIRC. Personally I would have
taken that risk and resolved them manually if necessary.

------
senthilnayagam
India has its set of branchless digital banks, Paytm is the leader.

India also has other things which is driving digital payment adoption, Aadhar
based KYC system, UPI payment interoperability system. Google Pay, PhonePe,
Amazon Pay and many other payment apps are now bringing payment to the masses.

and suddenly we realise, India leapfrogged many developed nations in the
process

~~~
break_the_bank
Monzo is very heavily used in physical stores in the UK. Paytm doesn't have
enough usage in the physical world apart from transferring money to friends.
RBI releases bank usage every few month, here is a link to see statistics
[https://rbi.org.in/Scripts/ATMView.aspx](https://rbi.org.in/Scripts/ATMView.aspx).
Monzo is the standard bank account of a lot of millennials.

I could see something like Monzo making it big in India, being an Indian
living in the UK.

------
thomasedwards
I had assumed that Monzo would sell to one of the big banks that forgot (or
couldn’t be bothered) to make their consumer experience better. But this feels
more like they could publicly trade at some point, although they might need to
make a profit sooner than in 10 years’ time.

~~~
loriverkutya
They always stated, they have no intention to be sold to a big bank.

~~~
frenchman99
Intentions can change.

~~~
andy_ppp
Haha, that's ridiculous, I know for a fact they have had face to face meetings
with RBS for example. I doubt they will sell while they are still growing, but
they will sell.

~~~
tommy5dollar
They use RBS as a routing bank for international payments, so obviously
they've had meetings with them

------
krn
I wish Monzo was available in continental Europe as an alternative to Revolut
before expanding to the US.

As a product, I find Revolut to be much better thought-out offering for both,
private customers[1] and businesses[2], but as a company I trust Monzo a way
more.

[1] [https://www.revolut.com/our-pricing-plans](https://www.revolut.com/our-
pricing-plans)

[2] [https://www.revolut.com/business-accounts-made-
easy](https://www.revolut.com/business-accounts-made-easy)

~~~
Dayshine
They don't have FCSC protection, how is that a better thought-out offering for
private customers?

"We can just throw away your money and you have no recourse, trust us with
your ~banking~ beyond banking"

~~~
krn
> They don't have FCSC protection, how is that a better thought-out offering
> for private customers?

Revolut started out as a "prepaid debit card for paying abroad", not as "your
main bank acccount", but is closing the gap quickly and should soon switch
over its customers to an EU-licensed bank entity.

I find Revolut to be better than Monzo in terms of features and costs, but
it's not suitable to be used as the main bank account yet because of the lack
of protection.

------
neillyons
Monzo are great. For those who are interesting they built most of their
backend in Go
[https://www.youtube.com/watch?v=iRNwLjKeVRE](https://www.youtube.com/watch?v=iRNwLjKeVRE)

------
lprd
Does Monzo plan to be available in other European countries? I live in France
and would love to open an account with them - but you have to maintain a UK
address in order to do so.

------
antaviana
I noted that stripe is an investor for this round. Strategic move towards more
vertical integration?

------
dannylandau
I use Simple (bank) and really like it. Seems like a lot of overlap with
Monzo.

------
rchaud
> The company is one of several so-called challenger banks taking advantage of
> the growing shift among consumers toward handling their finances on a
> smartphone.

As opposed to handling their finances on a website, like people have been
doing for the past decade? Even the smallest credit unions have apps these
days. What is "fintech" about this?

> The branchless bank is now making £4 on each customer it signs up to the
> platform, versus a £15 loss per customer last year, according to a company
> spokesperson.

Where's the GBP 2.5 billion valuation coming from then? There's not much
detail at all in the article. I don't want to default to cynicism, but this
seems like a company whose profile fits the current SV hype train, puffing up
valuations and eventually taking the company public, all before a single penny
of profit has been made.

~~~
nicoburns
Not sure I agree with this. A huge number of young people I know in the UK
have switched to Monzo as their primary bank account. The business model is
simple: the same as any other bank. Their competitive advantage is:

1\. Having better technical capabilities than traditional banks (they _have_
apps, but they're usually limited and clunky).

2\. Not having physical branches, and the associated costs.

~~~
rchaud
The article was very light on details, so I'd appreciate if could you
elaborate on the technical capabilities of the app. I get suspicious when I
see comments like:

> One reason that led Y Combinator to invest, Hariharan said, “was the
> traction with which they hit 2 million users in the U.K., with engagement
> metrics that almost look like a social network.”

It's a bank app. I can't speak for most people, but I don't open my bank app
more than a couple of times a month; it's to pay my CC bill, and to make the
occasional bank to bank transfer. If I'm spending a lot of time in the app,
I'm probably encountering a problem of some kind.

I also can't link "app engagement" with revenue. Banks make money on
mortgages, lines of credit and other financial products. I suppose daily
logins allow them to advertise this heavily (my bank does it too, and I hate
it), but to draw a line from A to B is a bit of a stretch.

~~~
tommypalm
> it's to pay my CC bill

Most people in the UK don't put regular spending on a Credit Card. Nearly
everyone will use their Debit Card for day to day spending.

A lot of the traction it has got has been with the 18-30 age bracket who are
wanting better budgeting tools than what larger banks have offered.

~~~
jl6
Are you sure? All the best cashback offers are with credit cards, not debit
cards.

~~~
nicoburns
Yes. Cashback from credit cards is mainstream in US culture, but not in the UK
(maybe some people care about this, but only ~5% of my friends even have a
credit card). Probably this difference is because card transaction fees are
regulated to reasonable rates.

