13 Reasons to choose Monzo Bank above its competitors
- 17 June 2020 | 180 Views
Monzo Bank is an online bank based in the United Kingdom. Tom Blomfield, Jonas Huckestein, Jason Bates, Paul Rippon, and Gary Dolman founded it as Mondo in 2015. Monzo was one of the initial app-based banks in the UK. It started off by providing its customers with a MasterCard debit card service that functioned exactly as a normal current account does, with the key difference being that it was all digitally run. Then in April 2017, it’s UK banking license restrictions were lifted, enabling it to offer a deposit account. It then closed its prepaid card service and upgraded its users to the current account service. As of February 2020, Monzo has had over 3.5 million customers.
How is Monzo different?
The banking industry has evolved radically over the years. While conventionally, customers commonly walked into a branch to perform the banking operations like money withdraw, transfer funds, or seek information about products. But today, a majority of customers prefer to carry out the basic financial transactions online, making way to the popularity of digital banking. A digital bank makes the switch to the Internet a step ahead by eliminating the requirement for physical branches completely. One such example of a digital bank is Monzo bank.
How does Monzo bank work?
Monzo markets itself as a bank that lives on its customer’s smartphone and is designed for the way we live today. It is an app-based mobile bank, available for download on iOS and Android and the user can just sign up in minutes. It works much like a regular current account, the user will be able to set up standing orders and make withdrawals and deposits, with the only difference being that all of this can be done using a smartphone without needing to visit a branch physically. Moreover, unlike traditional banking, Monzo boasts features to enhance customer experience by helping the customer with budgeting and organizing their finances as well as introduce some practicality to managing their everyday finances.
Why should I get a Monzo account?
Let’s explore the reasons to choose Monzo Bank above its competitors:
1. Live, real-time updates:
While making purchases using the Monzo card via the app, it lets the customer keep a track of their balances. Payments can be made to non-Monzo account holders too.
2. Get notified:
If the customer’s bills are higher or lower than usual, the app can notify the users.
3. User friendly:
The app allows customers to add notes and receipts to their transactions. The app provides user-friendly graphics to help customers navigate through the app and easily understand their spending and saving habits.
One feature often quoted as a primary example for user-friendliness is “Salary Sorter”. This allows the customer to neatly sort their money between spending, bills, and savings as soon as they get paid. Post this they can schedule direct debits to pay their bills automatically.
4. Can be used for travel abroad:
The Monzo card works like a normal card when the customer is spending money abroad, they don’t charge extra when customers pay using the card and directly pass on MasterCard’s exchange rate to the customers.
5. Get money a day in advance:
This unique feature of Monzo is what makes it stand out. The bank has the facility to advance money to its customers a day before their actual salary is due. So in times of need, customers can access this option.
6. Save up on those pennies:
The app provides a feature of “round-ups” to automatically save customer’s spare change into a Pot. So, every time a customer pays using Monzo, they round up the purchase to the nearest pound and put the difference in customer’s pot, thus inculcating some saving habits for the customer.
7. Variety of different accounts:
Monzo provides a wide variety of accounts for its customers like Current, business, joint accounts, etc.
8. Optional overdrafts and personal loans:
Monzo provides an arranged overdraft of up to £1,000 for its customers using the app and up to £15,000 personal loan can be taken from Monzo.
What are the benefits of Monzo?
We continue the reasons to choose Monzo, in this section of the benefits of Monzo.
9. Banking license:
The biggest advantage of Monzo Bank is that it has a banking license issued by the Financial Conduct Authority and the Prudential Regulation Authority in the UK, thus all its deposits are covered by the £85,000 guarantee
10. Ability to track and analyze spending:
Monzo allows tracking of the customer’s money in a very easy way. The customers can make spending budgets for different categories and monitor their spending efficiently. Also, instant spending notifications are of much help to the customers.
11. Satisfactory customer experience:
Monzo has a great team of customer service executives who are fast to respond and super friendly. They have even been voted as the best consumer bank in the UK.
Monzo is fully regulated by FCA, thus like any other conventional bank, it has to protect client funds and treat them impartially. It is almost impossible to set up a fake Monzo account as it has a two-step verification process that requires the customers to provide their passport or any other photo id along with a selfie video message.
13. Switching to better energy deal:
Monzo has partnerships with OVO and Octopus Energy, these are suppliers that offer better customer service and competitive pricing. So Monzo users can simply switch to these suppliers by providing some basic information in the app.
What is wrong with Monzo?
No cash backs:
No cash backs are provided on direct debits to utilities and other such facilitates, unlike some other banks.
Fee for cash deposits:
Monzo charges a £1 fee for all cash deposits done by its customers. Moreover, there is a limit on cash deposits each time up to £300 and a £1,000 limit over six months.
Lower interest rates on savings as compared to other banks
Convenience definitely comes with a cost, Monzo charges a 3% fee for overseas ATM withdrawals that exceed $200 a month and it cannot even accept international payments as it doesn’t have an IBAN number.
No physical point of contact:
As it is an app-only based bank, it does not have any physical branch or point of contact. This might be a problem at some times for its customers for problem resolution, bug fixes, and technical glitches.
What other banks are like Monzo?
The main competitors of Monzo include Revolut, Starling Bank, Barclays, and the other top challenger banks, but it’s most likely that it will come out as one of the best in almost all aspects. Monzo provides savings account and energy savings feature that no other competitors provide. The customer has total control of their card through the app, so if the customer loses his/her card, they can temporarily freeze it or cancel it through their phone. It is a fully-featured bank protected by the same systems and regulators as that of banks like NatWest and Lloyds minus their shortcomings.
The budget analysis on the customer’s whole salary and spending, as well as the wide variety of management tools makes it stand out from its competitors. Monzo charges lower overall fees and it doesn’t charge to provide its customers with a debit card unlike most of its competitors.
One of the major problems faced by challenger banks still is to convince people to make the switch before high-street banks close the gap. This new wave of startup companies on the banking scene can now be found in everyone’s pockets (in their smartphones). Sustained by relaxed regulation and the growing shift of people using their phones to do their banking, these branchless, app-only based banks are getting to win customer’s faith from their more established rivals.
Which challenger bank is best suited for an individual depends completely on their needs, and some people even may be better off staying with a legacy provider. Monzo has managed to create its space in the global markets using its desirable branding, transparency, and community-building efforts. Monzo recently also topped a banking app poll on Martin Lewis’ Money Saving Expert, leaving the traditional banks way behind in the pecking order. Its features give it an edge over its app-based competitors, which offer similar features.