Over 362,000 customers have upgraded to Monzo’s current account, but only 1 in 10 are using it as their primary bank account. So what gives?
Today’s the day: Monzo is shutting down the prepaid debit cards that were launched as part of its Beta programme. The London-based challenger bank has announced that 94 per cent of its active users have upgraded to a Monzo current account, with a total of more than 500,000 people now using the accounts.
Monzo has stated that this makes it the “biggest digital challenger bank in the UK”, a claim which has been slightly contested in recent weeks. Close competitor Revolut, which is not quite a challenger bank and more of a banking challenger due to its lack of a banking licence, reached 1.5m users last month.
However when speaking at the AltFi London Summit two weeks ago, Monzo product manager Valerio Magliulo stated that only 1 in 10 of all current account users have made Monzo their primary bank account. This is expected to increase after Monzo completes testing of the UK-wide Current Account Switching Service (CASS), which it released to a small number of users yesterday.
Monzo’s Beta programme launched back in 2015, offering a prepaid card alongside its banking app for people to use while it awaited authorisation from the Financial Conduct Authority. It received its full licence in April 2017, with the current account following in October.
“Given that customers typically stay with the same bank for an average of 17 years and only 3% of people in the UK move to a different bank each year, what Monzo has achieved is remarkable,” commented Eileen Burbidge, a partner at Monzo-backer Passion Capital and Monzo’s own investor director.
“To have so many customers upgrade proves how engaged and loyal Monzo’s user base really is. It reflects a genuine appetite for a bank that’s doing things differently.”
The digital bank has said that 80 per cent of its customer growth so far can be pinpointed to word of mouth and referrals. However like most digital challenger banks, with the exception of Revolut (although again that’s a slightly different ball park), Monzo has yet to break even, let alone reach profitability.
“I feel very lucky that we have a community of users that care enough to share their enthusiasm, ideas and frank feedback with us. They’ve helped us make Monzo what it is today, and I’m glad that so many people have chosen to join us for what’s next.”