Monzo launching in the US?

TechCrunch: Challenger bank Monzo has quietly begun working on a U.S. launch.

They spoke on the community about how they now have a customer support team in Las Vegas . The time difference between UK and LV is perfect for providing 24 hour support.

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Will be quite novel for a business in Las Vegas to not only take your money, but give you it back on demand!

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I just read the article and I think it would be an incredibly exciting prospect, and I really hope it happens in time. You can’t rush things like this though, and I’m sure they’ll know when the time is right for something as major as this.

The US is a huge market though and the possibilities are endless.

What do people feel would be better (appreciate this is purely personal opinion, with no market research behind your answers).

  1. Release a fully fledged bank account, which can challenge for people’s business from day one?

  2. Go down the pre pay route, build your brand presence, and then offer the full works?

I understand Monzo did option 2 in the UK, but it feels the FinTech world has dramatically moved on from 2016.

N26 are finding out that you can’t release a bare bones offering, and receive a warm welcome (at least from the 0.1% of people that care).

My limited understanding is that the US banking system is years behind the UK, so perhaps this will work out well for them in the end.

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I wonder if it might be worth phasing-in any US launch on a state-by-state basis? This could prevent them from being swamped and provide a great learning experience.

Maybe starting with a small cluster of states including California, Nevada first before moving on.

LV is not a bad shout for a base. It’s a university town with great connections and the real estate isn’t badly priced.

Also not a bad match for Monzo’s target customer, tech-savvy 20 and 30 somethings (assuming they’d be looking to target a similar demo to that in the UK).

That is the simplest option, there is nothing stopping them piggy backing on another bank until they are established, a lot of similar banks have done the same in the USA. However USA is very regional in terms of banking, breaking that is going to be hard.

Monzo launching on a small basis is going to be competing with some very big names. Banking is changing in the US, Monzo needs to understand the market to be able to change it and enter it successfully.

Take someone like Barclays in terms of Credit Cards a lot of people will have a card that is issued via them under a white label solution, including some of the biggest brand names in the US, but its actual bank isn’t that big. It’s only something like 50 billion USD in terms of assets and holdings.

Prepaid cards are very popular in the USA with most supermarkets and chains selling them over the counter. People class them as disposable, not what Monzo would be aiming for. Changing how Americans think by launching a prepaid card that works like a normal bank account, is probably not a simple thing.

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AFAIK this is changing in the US and there’s now federal legislation that allows fintech to grow.

Just my two pennies, but Monzo is going to die in the US market if they don’t change their business model. I was trying to explain Revolut, Starling and N26 to US people and their answer to everything was “my credit card already does this”. The markets are completely different, they don’t pay foreign transaction fees, they don’t pay for much from what I’ve heard. The only competitive advantage Monzo could possibly offer is free domestic withdrawals, but apparently they reimburse those commonly (large banks do so). They said N26, Starling et al are very European products and wouldn’t sell there. If Monzo are going to sell to the people who can’t get accounts (I’m assuming American checking accounts are similar to UK current accounts) I’m going to consider their run in the States a failure, because they will likely not have that much money to run on. I’m not sure how they’re going to twist this to work for them.

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I mention Barclays when people talk about American banking, even with its millions invested it struggled to get a foot hold in the USA banking system. It’s card product is established now and mainstream, but bank wise its still just a minor thing. Although its working on changing that nowadays.

Monzo is blinkered it feels its product is great, which it may well be, but its great to us, not great to a different market that operates totally differently.

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They never bothered to ‘get a foothold’, as they Barclays never got around to introducing chequing accounts (current accounts) in the US. They already have their credit card division alongside CDs and unsecured credit products.

I’m well aware how Barclays work. I have stated nothing that is incorrect.

I totally get that the US market is radically different to the UK and Europe, and Monzo in time will need to offer something radically different than what is already available there. I know nothing about the US banking system, so I can’t say whether I think they’ll be successful or not.

I do remember reading once though, that isn’t contactless still relatively minor in the US but widespread here and in Europe?

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Credit Cards are the predominant thing in the US, so there was never a need for contactless on them. Contactless evolved from the need for banks to offer a system of instantly taking your money from your account, there was just no need with a credit card as such. As more people use current accounts for every day spending, more banks are bringing in contactless.

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I’m not sure I follow? Surely the same thing that makes contactless great on a debit card makes it great on a credit card? Certainly myself use exclusively credit cards, and exclusively contactless, so what am I missing?

Contactless evolved by the need of banks to have instant transaction processing that was quick and easy for customers, that doesn’t apply to Credit Cards. Yes nowadays in the UK we are used to it on credit cards as well, but that is only a by product of contactless on debit cards. Banks process differently in the US there is no need for it as a process, but as banks change, the need changes

Credit Cards don’t need to be processed instantly, you are borrowing the money, a debit card you are not.

In the UK our banking system is very different to that elsewhere, banking is often agreements with regulators and the British Bankers Association as well as a few other organisations, we work on a regulation where needed approach, in other countries regulations are enforced so the rules are often less complex and so they are often backwards.

Excuse my ignorance on the subject, but does that imply that before contactless, credit cards weren’t processed instantly (I’m assuming by swiping?)

I’d always thought that contactless was purely for convenience to the customer (and retailer), and had nothing to do with how it was processed on the back end - But to be fair, I’d never given that side of it any thought!

The system sort of fell short in practice. That is why RBS group credit check you for a contactless debit card, but Barclays don’t. You can go overdrawn with a RBS one, but not Barclays, because RBS haven’t implemented it how it was designed.

This is the whole theory and practice discussion. I was talking about the theory behind the system, not how some banks put it into practice.

I don’t think this is right, the need for instant processing applies for credit cards just as much as it does to debit cards - they’ll still want to do real-time checking for fraud & checks that you aren’t going over your credit limit.

It is 100% right in the context I am on about. Also its a myth that cards are live processed, that is a fact. You can go over your limit in the UK unless your card has a force check activated on it, and credit cards very rarely do. However over a certain limit they are checked (capital one and cards like that do), under they are often not.

I don’t just make this information up, its all facts and can be proven simply.

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Go on then