According to recent monthly active user (MAU) data, Monzo leads among top U.K. challenger banks in the fast-growing mobile banking market, capturing more MAUs than N26, Revolut and Starling combined. It built that lead in no small part by centering its development on unique features users value but which incumbents lacked, including instant purchase notifications, real-time balance information and peer-to-peer (P2P) payments. The challenger will have to break new ground, however, to achieve the same success in the already competitive U.S. market, where those features are more common and other startups, like Chime and Varo, are innovating with early paycheck disbursement and fee-free overdraft coverage.
Monzo is aware that success in the U.S. will require a targeted approach that could be wholly different from what worked in the U.K. Thus, the firm is starting from scratch with a bare-bones beta offering available only to those who attend a launch event, where they can sign up and meet the design team. Currently, beta users receive a debit account and the signature coral debit card, which includes contactless functionality for purchases and can be frozen or “defrosted” at any time in the mobile app. Users fund the account either by linking another debit card, by using routing and account numbers for direct deposit, or by using another bank’s external transfer service. Moreover, like other U.S.-based mobile banking options, the firm’s P2P payment service allows for instant money transfers, but only to other Monzo users. Mobile check deposit—a staple of mobile banking in the U.S.—is reportedly coming soon.
Aside from mobile deposits—a capability already in production—other app features will depend on the startup’s engineers working with the beta-testing community through in-person events and an online forum. Popular features highlighted on the forum include some that many other direct banks offer, such as ATM operator fee reimbursements, early access to direct deposits and the ability to load cash into the account.
Other potential features could especially help the startup stand out in the U.S. market, including expanding its P2P capabilities through participation in the Zelle network. While many digital banks offer an internal P2P solution like Monzo’s, most lack the interoperability of Zelle, which is offered by 16 of the 18 national, regional and online direct banks in Corporate Insight’s Bank Monitor coverage group. While building a feature-rich experience will be important for growth in the saturated and increasingly commoditized U.S. banking market, the community-based approach that incorporates early adopters into development could be the edge Monzo needs to carve out a loyal customer base.