UK mobile-only bank Monzo thinks the U.S. is ready to go digital, making it the first stop on its international expansion.
In June, Monzo rolled out a debit card and mobile app to a limited number of consumers in the U.S. at in-person events. The FinTech company is popular in the UK with more than two million customers and it’s betting the same is possible in the U.S.
Americans have been slower to embrace digital banking unlike their counterparts overseas, but that is starting to change. Thanks to the popularity of mobile trading apps including Robinhood, which has more users than E*Trade, consumers are more open to digital banking.
Monzo is an early challenger bank, launching in the UK in 2015. It has grown rapidly in its few years of operation and now has around 850 employees. It sports a valuation of more than £1 billion with backers including Passion Capital, Thrive Capital, Goodwater Capital, Accel, and General Catalyst.
Its growth--Monzo is adding about 200,000 new customers a month--has been largely obtained via referrals. It’s the reason it chose to hold live events with the limited launch of the debit card in the U.S. Interested customers can now join a waiting list. The idea is to interact with customers to craft a debit card and mobile banking app that meets the needs of consumers in the U.S. In the UK, consumers helped name the FinTech and play a big role in the services it offers.
Monzo isn’t the only digital bank going after U.S. customers. Chime Bank, Simple, Varo and Moven are just some examples of the competition. The big banks, including JPMorgan Chase and Bank of America, are also all in with digital banking, giving the FinTech startups a run for their money. Monzo hopes to stand out from the pack by offering more than no fees. With the app, users can easily split a bill, get alerts about purchases before a receipt prints out and send and receive money from friends instantly.
But competition isn’t the only challenge the UK mobile bank faces in the U.S. Regulations, both on the Federal and State level tend to be more complicated than what FinTech companies in the UK are used to. Not to mention that while Monzo is popular with UK consumers, many aren’t depositing more than $1,000 into their accounts. Direct deposit of paychecks--the holy grail for digital players-remain largely out of its reach.
It hasn’t been a walk in the park for the traditional banks either, even though they have the size, customers, and cash. In June, JPMorgan Chase shuttered Finn, its stand-alone mobile banking app, realizing after a year of operations, customers didn’t want a standalone brand or app. JPMorgan is now rolling the features from Finn into the existing Chase mobile banking app.