Monzo is a bank and one of the most exciting startups in the UK right now. Banking is done through an app, rather than bricks-and-mortar locations, transparency is key, and community is at the heart of their offering. It's no wonder then that since launch in 2015 they have won a cult following. We chatted to co-founder and CEO Tom Blomfield about how they're using innovation to drive growth and make change.
You started off trading as Mondo and had to change to Monzo – how difficult is it to find a suitable name when starting a business and why is it important?
A strong brand is important for any business. But because we’re doing something very different in what has traditionally been quite a staid sector, a brand becomes especially important, and part of that is a name. Our brand and our name have to communicate that we’re taking a different approach, but also play an important part in building trust among our users.
From the very beginning, we’ve committed to involving our users in all the decisions that we make, so when we were forced to change our name as the result of a copyright challenge, we decided to ask our community to help.
Changing the name of a company can be tricky, especially as we’d already started to build our user base using a brand that we loved. However, the name change ended up being a good opportunity to show our community that we’re committed to involving them in all the decisions that we make. We received suggestions from more than 10,000 users around the world, six of whom suggested Monzo.
Some of your competitors are going out there and buying up bricks and mortar operations. Why haven't you?
As far as we’re concerned, bricks and mortar banking is a thing of the past. Big banks spend millions on maintaining branches, but it’s not always clear what they’re for, and they don’t cater to the way we live our lives.
Your crowdfunding raise was oversubscribed - why did you use crowdfunding, and why do you feel it's important to build a community of evangelists?
Crowdfunding allows us to give our community a stake in the company that they’re helping to build. We’ve always involved our community closely in everything we do, and we think this should extend to investment too.
Monzo’s ‘queue’ and ‘golden tickets’ has created a demand and exclusivity that has driven adoption and user numbers. Can you share any lessons on how this approach has helped you scale?
The best way to get existing users to advocate on your behalf is by building a great product, and providing great customer service. I think people are so passionate about Monzo because they genuinely love the product.
The waiting list has, however, proven to be a powerful word of mouth acquisition tool. We first set up a waiting list for the pre-paid card because we weren’t able to fulfil cards for the number of people who were signing up. But we’ve also found that it’s been a helpful way of spreading the word. Golden tickets allow people to invite their friends, which means lots more people hear about Monzo.
A lot of legacy banks try to generate that word of mouth artificially, by offering users money in exchange for referring a friend. But what they’re essentially offering is a bribe: they’re paying you to do something that you don’t really want to.
Your approach to customer service and product development is very open and transparent – from dealing with service issues, through to deciding on new features and even the company name. What is the thinking behind this and what impact do you think it has had on user experience?
Unlike the legacy banks, we’re focused on solving people’s problems, not selling them financial products. And I think the best way to do that is to take an open, transparent approach.
We’ve always believed that launching early and iterating would help us build a product that people actually want. And the feedback we’ve received from our community has shaped our product, and helped us make some important decisions. Just last week we reached out to our community, to ask for their input on a difficult decision about how we can cover the costs of making ATM withdrawals abroad.
People regularly share their thoughts on the community forum, and make suggestions that we post to our Extraordinary Ideas Trello board. Our Product Roadmap is also available for anyone to see, and we’ve gathered all our efforts to be transparent and open into our Transparency Dashboard.
Given the tight regulation within the financial sector – particularly within consumer banking – how do you go about truly innovating within a tightly regulated space, that at its core is still a fairly traditional sector?
Of course the industry is very tightly regulated, and I know many people would steer clear of setting up a startup in a similar space. But those regulations are there for a reason and there’s no reason they should hinder innovation.
Sure operating as a startup is about moving fast and breaking things, and failing fast and everything else. And on the surface that approach seems tricky to resolve with the rules and regulations you have to follow as a bank. However, compliance is something we take very seriously.
We worked very closely with the regulator to receive our banking license, and are now a fully authorised, unrestricted bank.
We’ve also seen a lot of encouraging developments, that show that the regulators are keeping up with the way the sector is changing.
What are the biggest challenges you face as a startup going up against the old guard of the banking world - do you feel the best approach is collaboration or competition?
When you think of a bank, you think of a high street branch filled with staff wearing suits, where you go to wait in queues and fill out long forms. That’s what we’ve come to associate with and expect from a bank, and in a warped way it’s what we’ve come to know and trust.
Building trust is one of the most important things we have to do in order to build our user base, but we’re also trying to change what that means in relation to banking. Trust isn’t about the weird reassurance we feel when filling out a form or speaking to someone in a suit. It’s knowing that, when things go wrong or you need help, that you can come to us and we’ll fix it for you as quickly as we can.
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