Long read

Monzo 2 years on – the startup threat big banks still “don’t get”

By Alex Wood 28 March 2017
Monzo CEO Tom Blomfield.

Exclusive interview with CEO Tom Blomfield.

Almost two years ago I interviewed Tom Blomfield, CEO and co-founder of Monzo.

At the time I called it the app that’s got the banks worried.

Since then, the excitement around this upstart took me, and the world of finance, by storm.

I’ve seen queues of people outside Monzo’s headquarters in London. No other bank can say its customers are that excited about an app with a prepaid card.

Now in 2017, with over 140,000 customers and £160m spent on Monzo cards to date, I sat down with Tom Blomfield again to find out how things have gone, the story behind those now-iconic pink cards and what the future holds.

Editor’s note: This interview has been edited for brevity.

Alex Wood: Two years on, what’s surprised you the most?

Tom Blomfield: How emotional people’s relationship with their money is.

That’s been a fundamental learning for me, I think of myself as a relatively analytical person and like to think I make logical decisions. Actually, it’s not true of me or anyone.

People have all these emotions mixed up with their money and the overriding one that we kept hearing people say again and again was anxiety, this feeling of loss of control. People feeling like money causes them stress and makes them feel like they’re not on top of things.

The great thing about the product we’ve developed is it gives people back the feel of being in control. We’ve had hundreds of people come to us and say we’ve made a measurable difference to their lives.

Now they have this different relationship with their money. Relationship – again that’s the language of human emotion.

What’s the story behind your card design?

There’s a great story. We found out about our card design deadline about an hour and a half before the printers needed it.

So we went to our very passionate and talented designer Hugo and told him we needed the design to be ready now.

And he hit the roof and said we’re disrespecting his whole career and his craft and couldn’t get it ready in time.

We apologised, and asked what could he do. He said, “..well I’ll just make it colour of my shoes then if that’s how little you respect my craft”. He was wearing these hot coral Nike trainers at the time, and it turned out we loved it. And that really is how it came about.

It’s really come to define Monzo and became a happy accident.

That hot coral card definitely gets you noticed…

It’s true, we hear it all the time. We did say we don’t want to just be blue or purple like every other bank.

Has your designer forgiven you?

He has! He’s now our Head of Design and runs a talented team. We try to give him more time to exercise his craft these days.

You said you hoped the bank approval process would take 6 months. What’s slowed you down?

It was totally unrealistic. If you look at all the banks going through this process it takes about two and a half years.

We are two years and one month into our journey or something like that. So I think when I gave you the timescales I was being massively over optimistic.

Always good to be ambitious… Can you say how far away current accounts are?

Not in any specific detail. What I can say is we’re testing them internally, so members of our team have current accounts and we’ll take it slowly.

We’ll first open it up to people who took part in our crowdfunding round. And then hopefully by end of summer, you will see most people transition across.

Any other surprises?

We didn’t anticipate the success of the prepaid card.

When we first proposed it internally, we were afraid of spending two years building in a vacuum without any customer feedback. We came up this idea of prototyping on a prepaid card which seemed a little bit crazy. We sort of had this preconception that because it wasn’t a full bank it only had limited functionality it would never really take off.

We thought we’d maybe get 5,000 people using a prepaid card and that was it was as much as you could hope for. We now have 140,000. So I think that that kind of iterative approach, launching before it’s ready and getting feedback from customers has worked incredibly well. I’m so so happy we did that.

You got a lot of publicity from having to change your name….

We have this remarkable knack of turning these events which could be painful or damaging to positive outcomes for the brand.

Do you have some sort of PR wizard working in the background?

It’s thanks to this guy called Tristan who started out as a 22-year-old intern and is now running our entire marketing function.

He is the voice of Monzo.

He writes all the in-app copy, all the update releases, a lot of the customer emails, a lot of crowdfunding communications in a really authentic voice of Monzo.

So I think the general lesson is being transparent and authentic gets you a really really long way. When you pump corporate bullshit out people react poorly to it. So being human, being transparent, being at times vulnerable and admitting when you’ve made a screw up I think earns you a lot of goodwill from customers.

Do you still plan to connect to services like loans and money transfers?

So this is 100% part of the strategy of the business going forward.

We are launching a pretty vanilla current count first because we want to get it live and make sure it’s working.

We will have TransferWise (foreign money exchange) plugged in. That’s the first step towards the marketplace where we bring in new services.

Since you’ve started there’s been a flurry of startup banks launching. Is the market getting too crowded?

I don’t think so no. One of our investors did an awareness study to see how many people knew about all the new startup bank brands and our cumulative awareness was about 1% of the market. And if you actually take people who open accounts that’s like 0.1% of the population.

So we’re not even getting started yet. Everyone has to have a bank account and we’ve not even scratched the surface. In my mind, it’s about getting to the starting line.

Is there a lot of camaraderie between the new startup banks?

Yes we have had a huge amount of support from the other challengers.  Ricky Knox and Ruth Hancock from Tandem provided an incredible amount of advice and support in the early days. They were about six months ahead of us in the application process and gave us a lot of support. And actually several of the other lesser-known banks like Masthaven and Charter Court and been incredibly generous with their time, helping me learn from their experiences.

That’s something we’ve tried to pay forward as well and give new banks a leg up as well.

You’ve become the poster child for challenger banks. How have the big banks reacted?

It varies. Certainly, we are on their radar now.

I’ve had the chance to meet with most of the big banks at an executive level. And I think they’re sort of intrigued. That’s probably the best way to describe it right now.

We are not yet even close to being a threat. We’re also definitely not within the top three or four things that CEO’s need to care about at banks. Monzo is not up there or even in the top 20. We’re intriguing, but we’re too small to be a threat yet.

So not bad reactions then?

No absolutely not.

I think the most common net negative reactions when you can put it that strongly would be it’s almost like we’re talking past each other. It’s not a kind of fundamental disagreement it’s more like the traditional banks have a relatively fixed conception of what banking is, selling mortgages and loans basically.

And they look at what Monzo is giving and sort of don’t get it. It’s not banking as they know it.

So we have this weird kind of debate where things we care about aren’t the things they care about. I’ve had several bankers hear about what we’re doing and say it’s all well and good but it’s just not banking. And we kind of shrug and say well you know fair enough if that’s what you think.

So what do the next six months look like?

Current accounts hopefully.

And getting it to the level of polish you expect from the kind of the Monzo app.

So not just doing standing orders and direct debits in a kind of crappy way that catches you out. But actually providing that level of visibility that alerts when there’s a new direct debit in your account and gives you a yes, no choice to accept it. Or if money is going to come out in three days time, how we can help with that. Really being proactive about these kinds of interactions.

Are there any other hires that you think have really made Monzo what it is today?

Yeah. Like 83 hires and I can’t mention them all by name here.

We have a phenomenal team here. I’ve mentioned just a couple but really the level of passion and dedication is pretty humbling at times.

I’m sure you’re sick of hearing it – hard Brexit, is it a blessing or a curse for you now?

It’s an annoyance and a hindrance I think. I am struggling to see the positives at the moment. And I can point to some clear negatives. It spooked a bunch of investors for sure.

Secondly, it made many of our existing European staff members very nervous about their future in this country. They don’t feel welcome here anymore. And it’s our ability to recruit new staff.

And thirdly passporting rights. Our license used to be guaranteed to work across 500 million people in two or three years it’s likely it will only work across the UK’s 65 million or whatever the cut-down version of the UK becomes.

And I’m guessing you’re in the dark about what’s going to happen?

I don’t think anyone knows. I don’t think there’s like a secret plan that they’re not telling us, they just haven’t written the plan yet.