Monzo Bank

Amme

Hi,
Due to the recent news about Monzo having an uncertain future, should Monzo customers be worried, I just thought I would get peoples opinions on it as I was thinking about closing my account due to the recent news!

Thanks. 

colsten

They are in a very precarious situation but you have your £85k FSCS protection, so your money is safe in Monzo. However, it would be prudent - which it would be in any case - to have a second, fully functional current account, with a different provider, that you can fall back to immediately if required.

The main thing is not to panic, as there is no reason at all for panic. If you are happy with Monzo, stick with them. The last thing they need right now is an exodus of customers.

DCFC79

Didnt know they were in trouble, will have to keep an eye on it.

colsten

For those wondering what the recent news are: Monzo just released their latest annual report, which shows a £113.8 million loss for the year. The overall theme is upbeat and positive but clearly they are impacted by the pandemic, like every other firm is.

In the depths of the report there is a sobering statement:

However, the Group is loss making and our revenue streams have been significantly impacted by the COVID-19 pandemic and resulting macro-economic uncertainty. Regulatory reviews will also lead to stricter financial crime requirements. This may result in lower forecasted customer numbers and revenues, along with increased costs associated with correcting areas of concern. This increases the risk that the Group will not be able to execute its business plan, which could adversely impact its ability to generate a profit or raise sufficient capital to meet future regulatory capital requirements. Due to these obstacles, the Directors recognise there are material uncertainties that cast significant doubt upon the Group’s ability to continue as a going concern. 

colsten

If you don't want to trawl through the annual report, here's a good precis: https://www.finextra.com/newsarticle/36317/monzo-covid19-casts-significant-doubt-on-ability-to-continue-operating

Shakin_Steve

From what I gleaned from 'This is money' yesterday, they are having problems getting people to use them as their main account and having their wages payed in. Most people use it as I do; top it up with enough for a months shopping and watch it reduce until payday. If I remember correctly, the average account holder kept £357 in their account. They also only managed to lend 8% of deposits.

Migster

Presumably, as they don't do much lending, customer funds should be available for withdrawal without any issues.

underwhelmed_saver

I don't think it would be a big deal if they went bust - you should be able to get your cash through the FSCS protection - but I don't know how long that would take to process. 

In the event of them going bust you need to ask yourself if you can tide yourself over a few days by accessing money from other sources (e.g. easy access savings accounts or other current accounts) until the FSCS funds are released.

It might be wise to  open another current account just in case  and transfer your salary and direct debits to that (some even offer perks for doing this - although not many these days) and maybe just use your Monzo card with a small float used for small purchases.

born_again

underwhelmed_saver said:

I don't think it would be a big deal if they went bust - you should be able to get your cash through the FSCS protection - but I don't know how long that would take to process. 

In the

How long will a claim against a failed bank or building society take?

7 days

FSCS aims to pay compensation within seven days of a bank or building society failing. More complex cases will take longer.

Complex will be certain qualifying temporary high balances

underwhelmed_saver

If anything I think that while Monzo will probably be fine, just slow growth, it's posts like these that remind us to make sure that in the event of an emergency we can ride through the storm by making sure we don't put all our eggs in one basket and build an emergency fund just in case

colsten

underwhelmed_saver said:

It might be wise to  open another current account just in case  and transfer your salary and direct debits to that (some even offer perks for doing this - although not many these days) and maybe just use your Monzo card with a small float used for small purchases.

The only one that might pay you £50 just for joining is TSB, via Quidco. https://www.quidco.com/tsb-current-account. Cashback is never guaranteed, and experience shows that it will take many months for Quidco/TSB to pay up. There's a separate thread somewhere about this offer. Given TSB's well publicised IT issues, the question is whether you'd choose TSB as your backup account.......

Rumour has it that Halifax will have a £100 CASS offer starting August 4. This requires a complete switch of an existing account. Again, separate thread about this offer exists.