- Monzo looking to target the UK money transfers market
- Similar companies such as Revolut keen to extend their influence in 2018
Based in the UK, Monzo is an online money transfers company looking to make an impact by granting other companies access to their customers rather than lending to them. This technique is revolutionary, yet is largely untested.
In nine months, the number of Monzo’s users rose by 300% and the company is now worth around two times more than this time last year with a valuation of £251m. Until recently, however, every customer initially entailed a loss of £50 for the company, due to the bank offering certain services like making international money transfers for free.
In an interview with Reuters, Monzo CEO Tom Blomfield said: “The more you grow, the more you lose and you have to turn that corner at some point.”
Monzo and Starling Bank (one of its competitors) tend to steer clear of hefty fees for overdrafts and foreign exchange. Even though these are lucrative for existing banks, consumers generally see them as a rip-off.
A new way of generating revenue revolves around sending users to other financial services and raking in a commission whenever it works.
Benefits of utilising digital-only banks include real-time spending analysis in addition to the fact that users can freeze and unfreeze their cards at the click of a button, a feature that Monzo offers.
Aurelie Gonnage, an advertising producer, uses Monzo to make money transfers, budget, and pay her friends. She said: “I love the instantaneity of it.”
Revolut is a similar platform which currently has 1.2 million users and is valued at £300m. The company believes that marketplace money is not enough to achieve the scale it wants. In 2016, the company enjoyed a £2.36m turnover selling premium and business account subscriptions.
Revolut plans to implement loans and overdrafts into their list of services, with Monzo likely to follow suit. In fact, Monzo has already made moves to reduce the cost per user, effectively lowering it to 50%. However, that came at a price, with overseas ATM withdrawals costing the company £16 per customer.
