Monzo evaluates what the company offers in an integration. If itās poor value for money it doesnāt get offered. Then itās up to the customer to see whatās available and if it suits their requirements
Iām not sure how Monzo deem what good or bad value is given that you can getter a better rate by going direct to Oaknorth than via the Monzo app? That doesnāt sit right with me, especially coming from a company that prides itself on transparency and making finance accessible to all.
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Thatās not quite right. The Alphaville team wrote a story saying that, that was the case but in fact, they were comparing two different products.
The Monzo x OakNorth product only requires a minimum balance of Ā£500, whereas the OakNorth account that offers a better rate requires a balance of Ā£1k+.
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its a product created only for the Monzo integration, itās not available directly from OakNorth. They tell customers they make money from the product so Iām not sure how transparent you want them to be
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Sure, I should have qualified that. It doesnāt take away from the fact that you can get a better rate by going to Oaknorth directly.
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I think the wording is quite unclear on this. Stating that Monzo earns a commission is one thing but what they donāt say is more important - that you could get a better return by going direct.
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I donāt understand your complain. They offer a specific product and are transparent about it.
Do you also complain that Sainsburyās doesnāt tell you that you could find most things cheaper at Tesco?
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The OakNorth offering currently available within Monzo is 1.14% AER/gross per year, Ā£500 minimum, next working day withdrawal.
OakNorth offer a easy access savings account on their website that offers 1.2% AER/gross per year, Ā£1 minimum, withdraw any time (I couldnāt find a time frame).
It is certainly a different product, but superior when regarding all the criteria typically used for comparing savings accounts.
I donāt think a Monzo customer would care about these kinds of semantics; as @HenryL quite rightly pointed out, you can get a better rate by going direct to OakNorth.
You can choose to pay Monzo extra money for the convenience of seeing your balance in Monozās app, but that is what you are doing. Continuously paying every year for that convenience.
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Which is what many people a choosing to do, as well as the ease of setting up the account.
Monzo is a business, they need to make money. By offering an integration with a provider they are able to have a savings product that otherwise wouldnāt be available. This is increasing the number of people who are actually saving as they donāt have the faff of looking at price comparison sites.And itās jusy easy 
Yes to the wealthy that 0.06% on their tens of thousands of pounds might be a huge deal. For the average person with maybe a couple of hundred maximum? Itās pennies
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These are exactly the people that should care the most and be taken extra care of! Those with very little savings are losing out more in real terms as that extra income however small would have a much greater impact on their overall quality of life.
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We will agree to differ then, I canāt see how that makes any business sense or realistic difference to the customer.
Dragging this back to investing, I presume some providers will create special products in exactly the same way the 3 savings providers have. You could probably get something similar going direct but again itās about accessibility and making people think of options they never have before
I donāt know that thatās true. I doubt that it is true in all cases. I know the message says that Monzo earn a commission, but how many of the people who signed up actually realised (actually went and checked) you could get a better rate direct?
I think the typical expectation of a consumer would be that commissions are built in to pricing and the customer doesnāt ānoticeā them, because thereās no way to avoid them.
If you donāt know that youāre paying for the convenience (or how much youāre paying for it), you are not making an informed choice to pay for that convenience. You are being hoodwinked.
Sure, and they could have gone the advertising model, where the service provider pays Monzo to get access to their customers. It seems like, however, Monzo was not in a position of power in this case, and was unable to obtain a deal with this provider that is in the best interests of their customers.
Taking an example of someone with Ā£1,200 (they save a reasonable Ā£100/month, but for simplicity of calculation, Iāll assume a lump sum), 1.2% gives them Ā£14.40 after a year, while 1.14% gives them Ā£13.68. Sure, itās only 72p different.
But every penny counts, more so for those who are unable to save much. If 72p doesnāt matter, does Ā£14 matter? What is the point of using a savings account at all? Everyone has to start somewhere, and it benefits savers to have the highest rate possible (given withdrawal requirements).
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The amount of money saved as cash should, in my opinion, be kept at a minimum. The difference between 1.14% and 1.2% is pitiful and certainly shouldnāt be of any consideration.
The main purpose of a short term savings account is ease and speed of access. I have a few hundred stuck in a 0% Monzo pot. If you want long term savings, then thatās what Freetrade is for.
Also teaching people the habit of saving regularly is considerably more empowering than a few decimal points of interest.
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Marcus are quick, easy and instant access and pay more than zero. Is that worth considering?
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1.35%, so my Ā£300 makes me Ā£43 in 10 years? That is not a good long term strategy, what is inflation at the moment, 2%? So in fact my Ā£300 is worth less by then. But none of that is the point because cash is not a long term savings vehicle so most likely I will be dipping in and out of my savings throughout the year (as I should do) and therefore I will get even less. Not really for me, by having my money in my Monzo pots where I can see it and factor it easily into my monthly budget is a much better strategy (for me).
My long term saving is in my freetrade where I can cry over the 6% drop and keep telling myself āitās for the long termā, āreinvest dividendsā, āstop looking every day at the share priceā ā¦
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Freetrade does not offer savings. It offers investments, which are a very different thing.
People have savings accounts both for short and medium term goals, and also for money they canāt risk losing, neither to a market crash nor to inflation.
Unfortunately there arenāt any inflation-rate savings accounts out there right now (that do not have low maximum limits), but Marcusās 1.35% is certainly a lot better than 0%, and better than the risk of a negative % for the risk averse.
Itās about good enough, and in the land of trying to limit your losses over many years to inflation, every fraction of a percent matters.
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It offers investments, which are a very different thing.
Iām not sure I agree with this sentiment to be honest. I remember reading somewhere that:
Investing is saving, just with more volatility.
Which if you think about it itās true. Sure, itās more volatile, or less liquid, or whatever extra aspects of it you want to characterise, but look at it from a high level perspective, and saving and investing are the same thing.
Iād say itās an irrefutable fact rather than a sentiment. There are, of course, similarities but I think itās wrong to conflate the two as having the same meaning.
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Just to chime in about Monzoās approach to their partners. Itās all about convenience and paperless/digital first.
When it comes to Monzo working with investment providers they just want a solution where they can have a slice of the pie, itās completely digital, and integrates nicely with them.
Itās not going to be based on the best of breed approach, itāll be anyone who can meet their requirements they will support. I expect the robo advisers will be first as the process is closer to a saving solution like OakNorth (digital account open, transfer the cash to the custodian, API to give you current valuation.) Whereas with a transactional broker there is much more involved.
I honestly have no idea who these challenger banks will partner with, at this stage itās more likely to be a white label from a traditional player (please not HSDL) as the new brokers arenāt quiet ready yet. I think it comes down to how well they do with the robos first, that will drive if they go transactional brokerage.
The robos are winning their customers from cash savers, so itās a nice defensive move to cover more of the market, offering a brokerage is a different type of customer (who still has cash savings anyway.) Share of wallet has always been a big deal but I donāt think these early banks will be chasing that chunk just yet.
Happy to be proven wrong and see what the future holds, I donāt expect weāll see any full broker functionality in these digital challenger banks for a while yet (unless someone like Freetrade chases that B2B2C market.)
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Freetrade doesnāt need to offer full broker services in such an integration, nor should it.
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