Is Monzo a force for good for the banking industry?

Within a year of its launch in 2015, Monzo was valued at £50m. Now, in 2019, it is a certified “unicorn” – a start-up valued at over £1 billion.

Staggering numbers for one of the earliest banks who challenged the traditional banking model by utilising technology. There are no branches, and everything is done via their smartphone app. With this, it has seen a primary customer base of under-40s.

As you can imagine, it has been popular with the younger generation.

Another monopoly to come?

In 2017, Tim Lewis of the Guardian rightfully asked, Is Monzo the Facebook of Banking? A powerful question for a young start-up. Even more so because this question is taken seriously.
Monzo has been growing rapidly with the younger generation because it takes advantage of the item we use the most – our smartphones – and couples with it a light and hospitable tone. This can give users the impression that Monzo is a helpful banking tool or friend that allows people to become more engaged with how their money travels.

Rather than an imposing vault we take money from and refuse to check because we’re scared of how much was spent on a night out. Shown by its strapline:

“We’re building the kind of bank that you’d be proud to call your own.”

Yet, a bank, no matter how wonderful its communications strategy is, cannot be your friend. In the same way that Facebook, no matter how much they apologise, still control vast amounts of personal data and use it to make money.

While it will be quite difficult for Monzo to grow to the same heights Facebook has (despite its aims to have 1 billion customers), it forces us to ask important questions about how we bank and the types of problems we face as users.

A Bank for the Devil’s Advocate

Before the Switch Guarantee was introduced in 2013, on average, we would stay with our banks for seventeen years.

With such impressive loyalty comes inevitable stagnation as innovation is not a requirement to stay ahead of the curve. Why spend money trying to do new things and failing?

With the introduction of banks like Monzo, we can almost see it as the bank for the devil’s advocate.

What if we wanted all our money to be safe? Monzo keeps all its money in the Bank of England and does without speculative trading.

What if we wanted to spend money abroad without fees? Monzo only charges 3% on withdrawals above £200.

What if I wanted to talk to someone through my phone without long waiting lines? Monzo’s helpline is a messaging service and you’re simply notified when there’s a representative ready.

What if my data was imitated because someone got access to my digital banking? Monzo… we’re not sure yet.
What if there was a concentrated cybersecurity attack on digital banking services? Monzo… hmm. Tough question.

What if Monzo reaches 1 billion users but instead of personal data, it controls money? Are these Facebook-sized problems? Yes. Yes, they are.

Speak of the devil and she will appear

Monzo does a lot of good for its customers by making it easier for them to access their money, find help and structure their savings in a way that benefits them.

Beyond that, we see a large long-term impact it has on the banking industry. It forces the industry to move into the digital age and answer important questions regarding cybersecurity, loyalty, and banking monopolies on a scale we have not yet experienced.

As frustrating as they can be to answer, it is better to attempt an answer, rather than hide from them until we have the Cambridge Analytica of finance breaches on our doorstep.

Tom Bloomfield says that Google’s “Don’t be evil” vow is limited. He asks instead:

“Why not try to leave the world a little better than you found it?”

Monzo, by itself, won’t be the complete answer to our banking problems. Let us not overestimate the impact of technology.

In the long-term, we may find ourselves thanking Bloomfield and Monzo for asking us questions about the banking industry we may not have seriously considered.

Perhaps that is how Monzo will leave the world a little better than before.

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