There was a decent amount of fintech news in the last few weeks, including the launch of Monzo Plus, as the challenger bank scrambles to find new revenue streams amidst the coronavirus crisis.
Can a bank charge for software? That’s the existential question Monzo appears to be asking itself with its second — or, possibly, third — attempt at launching Monzo Plus, a premium version of its popular current account.
What’s interesting about the new new Monzo Plus is that it deviates quite a lot from the more traditional packaged bank account. Instead of bundling a number of typically up-sold products, such as travel or gadget insurance, as many banks and fintechs do, the product is much more akin to a paid-for software upgrade.
Features include third-party bank account aggregation (seeing Monzo create its own open banking connectors rather than using open banking API providers, such as TrueLayer), virtual debit cards, custom transaction categories, spreadsheet export and credit score updates.
There are a number of more traditional perks, too, such as the ability for Monzo Plus customers to earn interest on their balances of up to £2,000, discounts at partner merchants and £400 of fee-free withdrawals abroad.
On trying to bring a SaaS model to consumer banking, Hudack told me he believes it is clear that there is software in the world that is worth paying for and he doesn’t see any reason why that should be different for a bank, especially one like Monzo that acts like a software company as much as it does a financial institution.
One interesting debate around the new new Monzo Plus is whether or not it fails on the challenger bank’s self-stated mission to ‘make money work for everyone,’ since only those who can afford the £5 per month get access to the new more useful money management features.
However, I don’t really have a definitive position on the ethics. Arguably, a simple monthly subscription is a much more transparent and honest business model than the opaque charges typically levied by incumbent banks, where the most indebted customers cross-subsidise ‘free’ banking for the rest. On the other hand, features, such as account aggregation – which Monzo is charging for – can be found for free in numerous products from competitors.
Of course, the best software isn’t usually about one single feature but the way they work together. In other words, the sum is greater than its parts. In this regard, your mileage with Monzo Plus may vary and I’d love to hear the experiences of ITK readers who have signed up to Monzo’s new premium offering.