Mobile banks


(Matteo) #1

Hi everyone,
I was looking more into the mobile only banks and I was kind of curios about feedback and experience that people had with them.
From what I got here on Freetrade there are many supporters of Monzo but what about others like Starling, N26 etch.
I know are all projects in their infancy so the panorama in 1 year or even 6 months might be different but I was curious to know your experience.
Thanks in advance!


(Vladislav Kozub) #2

As you have probably noticed, Freetrade community seems to be more interested in other fintech brokers first and foremost (Revolut, Dabbl, DeGiro, iWeb, etc.) - which is, of course, quite understandable.

Banks are less affiliated to this area of business, hence the lack of discussions about them. In my opinion, there are two reasons for Monzo being an exception on this forum:

  1. it has very similar values that correlate with Freetrade’s very often - transparency, utter sympathy and attention to the customers, and lack of predatory customer acquisitions (by means of paying them), as well as steady growth with no ‘we will do it yesterday’ feature implementations.
  2. little extra intro to Monzo: unlike all other banks (Starling, N26, Revolut [albeit not yet a bank] and others), Monzo’s long-term vision involves having an ability to act as its customers’ core financial hub where one could manage expenses, savings, pensions, insurances, loans, mortgages - everything that will allow you to have a full control of your finances. This is where Freetrade can be a win-win deal for both. If it was to be a part of that marketplace - it will allow Monzo users to have an excellent investment product intertwined with their banking service (Monzo’s users are happy with their bank helping them save, and they subsequently become Freetrade’s users too, allowing the latter to grow further). This is, arguably, the most paramount reason why the community is so passionate about the idea of Freetrade-Monzo integration.

Interestingly, they have made it quite smoothly with TransferWise, whereby the latter facilitates Monzo’s international transfers and all managed within the app (but the commission would have been the same as if you used TransferWise directly - little cut to Monzo goes from TW’s revenue).

Granted, transfers are a very simple feature, but it is a great precedent of another company providing its service through Monzo. Hence once Freetrade will be up and running, and Monzo will have resources to make further integrations - this marriage may as well happen.

I guess you can now see the reasons behind our ‘favouritism’ towards Monzo. But don’t get me wrong, each one of other banks offers great products and all are equally able to grow and prosper; just not affecting us as much :slightly_smiling_face:


#3

The potential relationship between Monzo and Freetrade sounds very interesting.

For what it’s worth, I’ve got an account with Starling as the card and cash withdrawals are fee free when travelling abroad. When I was doing my research into which account to go for, it was a toss up between Monzo and Starling and although both are pretty similar, I went for the latter in the end as it pays interest on account balances (up to £2k), albeit a tiny 0.5% but more than Monzo’s zero %.


(Vladislav Kozub) #4

There are rumors that Monzo is soon to implement 1.2% :wink:


#5

I wouldn’t mind a savings “interest rate war” happening between banks - good for all customers!


(Louis Otto) #6

True that, but I still think most people would generate a few quid at most - far better off to have it on even a basic index tracker if you want to make your money go further. If you need quick access, though - I get it :slight_smile:


#7

Yes, it’s only a few quid and for quick access only - I would hardly have my holiday money in index trackers :wink:


(Matteo) #8

Thank you everyone for the reply and information. My question was more oriented towards the end user point of view and not as possible competitors. Nonetheless now I understand better why there is a favouritism towards Monzo since the potential integration.
@weenie, for the moment in my limited research so far I was more inclined towards Starling for the small interest rate.

Out of curiosity anyone heard or used Monese?


(Christopher) #9

@Elettric, I just missed out on Mondo’s (now Monzo) Alpha, but managed to get onto the Beta product once it launched up so I have been with them for quite some time now, (I still have my Mondo prepaid card! :heart_eyes:). It’s been quite awesome watching the business develop and evolve, as well as to watch the competition respond and attempt to address their own shortcomings - it really is an achievement if you can influence the behaviour of some of UK’s banking giants. You’re totally right, it’s still very early days, but both Monzo and Starling in the UK stand out for the excellent progress they have both made in building banks from literally zero to regulated functioning deposit taking loan creating banks, with a combined 1m+ customers in just a few short years.

My own experience has been largely positive; responsive customer service, acceptance of my Monzo card where BBVA and HSBC have not been, notably in rural Africa, where I had cash issue (though not sure if this is lax fraud prevention on Monzo’s side - pre-current account), which was a bit of a bullet dodge, but the stand out feature for me is direct engagement with customers and users, and involving and informing them in and of decision making processes.

However, I haven’t switched all my banking to Monzo or Starling, as currently they don’t offer everything I need. If Monzo can indeed execute their plan to create a bank as intelligent financial platform, then I could envisage using them as my primary bank. However there are some ifs, buts and whens in this, and as you point out direction, focus and strategy can change quickly and unexpectedly.

Very much so, and the UK savings market seems to be pretty sensitive to very small differences in paid interest, given that rates are so low. Deposit takers find super marginal differences increase product uptake significantly, so I think it makes perfect sense for the neo-banks to offer attractive rates, as it can have a balance sheet strengthening effect when deposits increase. This is certainly important for banks geared to lending like OakNorth.

When the businesses seemingly align in terms of both values and target audience, it really does seem like a no-brainer for meaningful integration. Given the presumed similarity in corporate culture and motivation, the spirit and desire to integrate should almost come naturally. For me the most important point here is Monzo’s reach: they are on target for 1.5m users by YE2018, 3.5m by YE 2019. That’s some serious potential market share for Freetrade, dabbl, etc. to tap.

I was at the Monzo’s July Q+A where Tom spoke openly about their plans to offer interest on savings as well as a capital at risk investment account. After the presentation I asked Tom what this investment account in practice would look like, and his reply was that Monzo will initially provide a Vanguard or similar ETF, directly rather than offer any third party integrations. He also confirmed that they were in the process of applying for the relevant regulatory permissions to allow this. The presentation is below, and definitely worth a watch to get a flavour of the Monzo culture.


(Alex Sherwood) #10

Monese provide a great service but they charge fees for a lot of the services that the challengers like Monzo & Starling provide for free. Their target market is generally people from outside the UK who’d usually struggle to open a bank account because they don’t have the right documents etc. So if that’s not you, you can probably cross them off the list :slight_smile:


(Alex Sherwood) #11

Just in case anyone’s interested, there’s more on this here :scroll:


#12

Zopa is planning on entering this space as well, it’s getting very crowded…but I guess it’s good for us :slightly_smiling_face:

Interestingly Starling has a banking-as-a-service offering, Raisin being the first company to build on it. Plus Stripe has a Stripe Issuing, a end-to-end platform to quickly create, control, and distribute physical and virtual cards. It’s invite only right now. Maybe we’ll see some more as a result?


(Matteo) #13

@CTE thank you for the video, it was very interesting. Actually about the marketplace I’m curios what kind of deal Freetrade can get since, if I understood correctly, they will charge a fee for using it.
Seems also Starling have a marketplace.
I watched also other videos and for both Starling and Monzo, even if in a different way, I feel that they have a somewhat similar approach and culture even if implemented differently.

@alexs thanks for your take on Monese, I can actually see the charm for people coming from outside the UK. Especially the proof of address I find it particularly annoying even if I understand the rational behind it.
I think they could ask for the NI number instead or as alternative to the proof of address.

I remember that when I came to UK to open it was a bit of a pain and fortunately the bank accepted the tenancy agreement, but I have no idea how you could do if you don’t have something like that for instance you are hosted by a friend. You need bills to prove your residence but you need a bank to pay them in most cases and if you have none how do you do?
Actually this make me think, if you are a teen living with your parents and no bills how do you open your bank account?

@weenie I forgot to mention that as you were saying also the no fee on withdrawal.
On their website I was checking about sending money abroad and I thought is quite nice that they offer a comparative table https://www.starlingbank.com/send-money-abroad/
Since Monzo use Trasferwise at least at first look seems they charge about the same with Revolut as clear winner in this field but anyway much lower than legacy banks.
This is also valid for the no fee on the card abroad that both of them offer, many legacy bank charge you ludicrous amount for the privilege to spend your own money abroad.

I was reading a comparison between Starling and Monzo on Starling forum, I lost the link but if someone is interested I can look for it again, and was quite interesting see why some chose one over the other and many, as @CTE was pointing out, have either or in some case both but they still keep their old account because they don’t offer yet all they need. It also seems that the implementation of new features comes in waves. Of course this is the feeling I got from what I read and no direct experience so I can be completely wrong.

It’s really an exciting time to be alive!


(Alex Sherwood) #14

Yeah they’re great for the people that need the service, they just hit 500k users, with a large proportion of users appearing to use them as their main bank :smile:

Good question & this is good timing because Monzo just made their current accounts available to 16 & 17 year olds.

I could be wrong but my understanding is that if Monzo can verify your identity, using a passport or driving license then because they’re sending the card to your address, they don’t actually need additional proof of address. I know that a while ago, if you couldn’t provide a compatible passport / driving license then they would do a ‘2 + 2 check’ asking for two forms of ID (birth certificate, marriage certificate, etc.) + two proofs of address (a letter from another bank, bill, council/government/NHS letter, etc.). But that process is constantly evolving, as they work towards offering current accounts to the unbanked. It sounds like you might find these guides interesting:

it’s this type of work - opening up the banking system, to make it accessible to people that haven’t been able to use it until now - that’s one of the things that make me a big fan of what they’re doing! No one should have to go through the kind of hassle you described to open a bank account.

They are but just be careful when it comes to using them to send money abroad that needs to arrive urgently. If you need to contact their support, it can take a while.

It’s amazing how many things the users on the Starling forum get wrong about Monzo :grimacing: my advice would be to use the Monzo forum to learn about Monzo & the Starling forum to learn about Starling but feel free to carry on asking questions here too of course!


(Matteo) #15

@alexs Thanks for the reply and the very useful links.

I heard too that especially certain country with Revolut can take a while but if you have no hurry or country not covered by the other banks, ok here I can be totally wrong, but China for instance I didn’t see it cover.

About the comparison of Starling forum I thought was quite well balanced because was more or less evenly split between who had both, the one or the other. So I could assume that in that case could have been relatively correct and non bias.
Of course your suggestion to look at the source to learn about them is absolutely spot on and very rational!:sunglasses:

Monese at this moment are having a promotion that give 5£ at sign up.
But with the so simplified sign up of Monzo that to me appears equivalent, again I might miss something here, and almost no fee on all services is it even worth look at Monese?:thinking:


(Alex Sherwood) #16

I agree, even with that discount it’s probably better to try one of the challengers that don’t charge (almost) any fees & then if you run into any issues with getting an account, that’s when I’d look at Monese. I hope that helps!