Is Monzo safe?

slaney

I have a Monzo account and I have had it for a couple of years.  However I also have Santander and get the cash backs on DD. I am not ready to go all in with Monzo. The Santander account costs me £4 a month but I get £10.60 cashback - i.e I get about £80 a year cash - but I am about to switch my mortgage to Halifax for the cashbacks will get reduced. 

I like Monzo for the app on the phone, and things like being able to monzo.me some cash or split bills when eating in a resturant.  It is also a very easy app to track money in, although I do also import into YNAB using SyncforYnab. I like being able to spend money overseas for free.  But eventually this is not going to be free and it will be like any other bank because they have to make a profit.

Given £114.8m in pre-tax losses this year, similar last year I wonder about their future. Monzo’s accountants report in the annual account there was “material uncertainty” over the company’s future. They raised a “going concern” warning in the 2019 financials too, saying there was “significant doubt” on Monzo’s ability to continue.  Monzo also has had to cut staff, shutter its Las Vegas office and raise £60 million bridge funding in a highly publicised down round during the pandmenic.  Founder Tom Blomfield has completely walked away citing mental health challenges.  As a former MD of my own company I empathise as once a company gets into trouble it is the worst time of your life.  I am still sorting it over a year later.

Why Challenger Banks Are Broke - Making Money Is Not In Fashion - as it states in here the future of Monzo is probably an IPO.  Therefore they should be able to continue to be able to raise investment for now as they are valued at £1.6Bn and the originally investors will want to cash out at some point. Monzo has raised £125 million in funding since COVID-19 struck. 

It is the facebook business model of build a big customer base by offering free and figure out how to make a profit later.  But if it follows Facebook then it will move from something that was quite benign to something that now is quite the opposite.  They have to make money from you somehow and that is either selling you products, selling your data or charging fees. 

I think in reality if they went bust they have such a signficant customer base (Monzo now has almost 5 million customers) that a bricks and mortar bank like barclays, hsbc or santander would step in an buy them if they were not IPO'ed.   Personally, I think the most likely future is a takeover rather than an IPO personally rather like Northern Rock, which was initially nationalised and they sold to Virgin.  As I have joint account, I have £170k of guarantee that means my money is safe and would get paid back to me in 7 days, but the most I have held in Monzo is £20k.  I am not worried about my money in the bank but it will be a hassle if it fails.

The challenger banks don't have the exclusive apps they used to https://www.moneysavingexpert.com/banking/digital-banking/

[Deleted User]

Starling seems slightly profitable but neither Monzo or Revolut are. 
Other than some kind of all share merger, I can only see a real bank buying when/if they go bust.

[Deleted User]

The only digital bank I would truly trust is Chase. Because if JPMorgan actually goes down they all go down. It is too big to fail and if it was allowed to fail the financial system would be finished anyway.

Shakin_Steve

Deleted_User said:

The only digital bank I would truly trust is Chase. Because if JPMorgan actually goes down they all go down. It is too big to fail and if it was allowed to fail the financial system would be finished anyway.

Your deposits are protected up to £85,000 with any organisation that has a banking licence. Monzo has a banking licence, so what's the problem?
Jeez......🙄
Do you think having an account with Chase gives you some kind of exclusivity? I think anyone with any sense would wait until they offer a full range of services before bothering to sign up. At the moment they are just playing at being a bank.

[Deleted User]

Shakin_Steve said:

Deleted_User said:

The only digital bank I would truly trust is Chase. Because if JPMorgan actually goes down they all go down. It is too big to fail and if it was allowed to fail the financial system would be finished anyway.

Your deposits are protected up to £85,000 with any organisation that has a banking licence. Monzo has a banking licence, so what's the problem?
Jeez......🙄
Do you think having an account with Chase gives you some kind of exclusivity? I think anyone with any sense would wait until they offer a full range of services before bothering to sign up. At the moment they are just playing at being a bank.

Not sure what you are going on about really. I don't even use Chase account, I have one and it's just sitting there. Anyone can sign up for one so how it is exclusive? 

The question was about trust in digital banks. A lot of people don't trust digital banks, a digital bank with a powerful physical bank behind it, is of course going to be trusted far more. Rightly or wrongly. It remains to be seen if Chase UK will be successful, but I think they have a good chance once they iron out the issues with direct debits and overdraft. 

Shakin_Steve

What I am 'going on about' is that trust doesn't come into it. Your money is safe up to £85,000, so where's the need for trust?

Lightning360

Shakin_Steve said:

What I am 'going on about' is that trust doesn't come into it. Your money is safe up to £85,000, so where's the need for trust?

Trust is still a part of it, whether it makes sense or not. Do I want to put my hard-earned money into a bank that I feel as if I trust or one that I don't? It is important, even if you don't think it is.