Monzo Plus – Attempt No. 3

Monzo have launched the latest iteration of their Plus account, a current account that sets out to provide a premium banking service for those willing to pay for it.

This is Monzo’s third attempt at a Plus account. The first attempt came in the form of a better core feature set (1.5% interest on account balances, for example), a card of a different colour, and then the ability to top-up the functionality with optional extras such as travel insurance. The second attempt was a similar core concept, but with two options targeted at different demographics – the traveller, with insurance, cash withdrawals abroad, and airport lounge access, and the “supporter” which felt more like a Monzo fan club.

Both of these iterations, and a few minor changes in between, failed to gain the traction they needed and were ended after only a few months. Is the latest iteration of Monzo Plus headed down the same path?


Before I get into the features, who am I and why do I care about this? I’m Monzo user #13, and I signed up for the original promise of a bank account that used modern technology to make it easier to be good with my money. This review is based on this context, and how I want to use my bank account, so it’s worth considering if my reasoning applies to you.

I am a Monzo shareholder, although at the level of entertainment value rather than a worthwhile investment.


Features

See your other accounts in Monzo

This is neat, I wonder how good it is in practice. This likely uses Open Banking APIs to connect to other bank accounts. What this means is that there are some significant limitations:

  • Limited to the big banks who are required to provide access.
  • Data quality is mixed as every bank has their own implementation and caveats.
  • Must re-authenticate regularly, access is typically only granted in 3 month blocks.
  • Probably no push notifications, or a delay if there are push notifications.

This is a feature that Barclays have had for the past year or so, and I think it makes sense to have a single app for most of your financial needs. It’s of limited use for me as Monzo is my only current account, but it’s a good idea in general.

1% interest on balance

More money is good. With the cap of £2000, this means that the maximum you can gain is £20 in a year, and Monzo Plus costs £60 a year. To me the idea of promoting an interest rate on something you pay more for is pointless. I think it would be more honest to figure out an average amount of interest most people would get, remove that from the price, and drop the interest feature entirely.

Holographic card

This is little more than a marketing gimmick. For brands that have built a reputation of quality, like the top fashion brands or companies like Apple, these can feel valuable. However Monzo’s branding of accessible banking likely goes against them here. To me this doesn’t feel premium. Combined with the fact that the card is a one off cost to Monzo but an ongoing subscription for me, it ends up feeling a little cheap.

Custom categories

This is another cool feature, but I’m not sure why it’s limited to Monzo Plus. It’s a feature that’s likely to help many users manage their money better, so it goes against the original promise of the product to restrict its use. Whereas features like the connection with other bank accounts feels like it has some “cost” to it (be it engineering, service costs, maintenance, support), this feature doesn’t have that same weight, and the justification for restriction feels weaker. I don’t doubt the engineering complexity of building this, but there’s a difference between the effort and perceived effort, and I think it’s features with a high perceived effort that can be justified for additional costs.

Virtual cards

On the face of it this is cool, but in practice I don’t know what I’m getting as a user, and I have two concerns.

First off, user experience. The best services that do this implement browser plugins so that you can easily fill fresh card details each time you bank online. This is pretty slick, but I don’t believe Monzo are publishing a browser plugin, so does that mean copying card details out of the app every time? More and more though I’m paying on my phone, and the UX of copying and pasting details between an app and the browser on my phone doesn’t sound like a good experience. Apple/Google Pay provide a great UX, particularly on mobile, but going through the onboarding process for each new temporary virtual card sounds like even more work.

Secondly, the liability for fraudulent payments always lies either with the merchant or the card issuer, never with the user. It’s a hassle to chase a fraudulent payment, but with a UK bank you’re very well protected and have multiple avenues to get your money back. Given the amount of regulation over retail banking there shouldn’t be a way to lose your money.

I don’t know how Monzo expect people to use this feature. While I suspect many users will be excited to have more security online, I think this comes from a place of not understanding their rights and the technology involved, which leads me to question whether Monzo are taking advantage of “security theatre” and users fears rather than educating them. I want my bank to make me better with my finances, not take advantage of my lack of understanding.

Monzo mention not having to update your card details online if your card gets stolen, I guess that’s handy but I don’t think anyone would say this is worth paying for. More and more services support automatic updating for subscriptions when new cards are issued, something Monzo already does.

Advanced roundups

I’m lucky that my roundups are not the bulk of my savings, they’re just an easy way to top up a little. For those like me who save a lot I don’t think there’s any benefit to a feature like this over using Monzo’s IFTTT integration to save a fixed amount per day (I save £5 a day) or the “1p challenge” where each day you save based on the number of the day in the year (e.g. 10p on Jan 10th, £3.45 on Dec 11th).

For those for whom roundups form a key part of their saving strategy, they are a great tool, but should you be spending £5 a month on Monzo Plus? I’d suggest the IFTTT integration as a handy alternative.

Credit tracker

This looks like a nice credit tracker but I already get two credit reports from two of the three major credit reference agencies for free by email each month.

The way Monzo could make this really worth it is actionable, personalised advice, at the point of spending, but it seems Monzo are a long way from this for now.

Offers

Offers are not a feature. Most of these are introductory discounts which means Monzo is likely getting them for free or even being paid to provide them. Exclusivity doesn’t necessarily mean anything as there are competitors to all of these offers who may well offer the same sorts of discounts elsewhere.

The only sort of offer that I think can be worth it is things like air miles or cashback as these aren’t predicated on buying particular products.

Fee-free withdrawals abroad

This feature is great for a small subset of users who need this. For context, the base account offers £200 fee-free withdrawal abroad. Monzo Plus raises this to £400.

If you travel every month in non-EU countries that have low rates of card use, then I can imagine this being very useful and worth £5 a month.

If you only travel every few months then this becomes expensive as you might be paying £15 (3 months of Monzo Plus) for £400 of withdrawal. At this price it’s better to go to a currency exchange.

Auto-export transaction

For the true personal finance nerd this is a great feature. I expected to be excited about this but I realised that again it’s not quite living up to to the promise of making me better with my money, but only giving me the information for me to use to do this myself.

I’d like to play around with this data, but I’ve also got to be honest with myself that despite being motivated and having the know-how to make use of this I’m unlikely to actually do anything with it (a bit like my Raspberry Pi and Arduino).

I think this feature is incredibly niche. A great idea for the small minority who will be able to get the most out of it.

1 free cash deposit a month

On the free Monzo account this costs £1 per deposit, meaning this has a maximum value of 20% of the cost of Monzo Plus. I also imagine that most users don’t make use of cash deposits anyway as we transition into a cash-light society (not quite cashless yet) and given Monzo’s typical customer being younger and more tech savvy.


Some of these features are good, but niche. Some are nice, but feel strangely positioned for a fee of £5 a month. And some of these don’t sit well with me coming from a company who should be helping me manage my money better.

After considering all of the features, my conclusion is that this is a significantly better offering overall than the previous iterations which were almost more of a Monzo fan club, but likely not worth £5 a month for the vast majority of users. I’m not saying Monzo isn’t worth paying for, they make money from customers using their accounts even if they aren’t explicitly paying a fee as most major current accounts do, and existing up-sells such as their electricity supplier switching advice add to that in a way that aligns well with customers.

Unfortunately a problem for Monzo with being a bank account is that so many benefits can be thought of as a clear cost trade-off. While it’s hard for me to put a number on how much value I get from my Netflix subscription that costs £7.99, it’s very clear what the maximum value I can get from a 1% interest rate on my current account balance is, it’s £20 a year but for a cost of £60.

It’s good to see Monzo continue to iterate their product and experiment with new things because if they win more of the market it will be by out-pacing the large slower moving banks. Part of that experimentation is failure, and as long as they learn from it that’s worthwhile. I suspect this iteration of Monzo Plus will fail, but I also expect the next iteration to be better.

Will Monzo iterate this or cancel it and retry again as before? I suspect we’re more likely to see small iterations to this core feature set rather than another overhaul. The quality this time around is far higher than before, with some beautiful web design, iOS work, and some complex integration with other banks. I suspect the sunk cost may be too high to backtrack fully, but small iterations and testing is a great way to improve a product over time.

Congratulations to the Monzo team on their next step, and I look forward to seeing how Monzo Plus grows and develops in the future.