The Third British Invasion – What does Monzo’s US launch mean for UK fintech?
Monzo are trying to launch in the States. But are they just a little bit too English?
With the launch of Monzo in America, are we about to witness the excitement of the 1960s? Is Tom Blomfield our generation's John Lennon? This might sound at this stage a slightly dogmatic statement to make.
However, like the fab four before them, Monzo’s leap into the American market might open the door to a number of UK challenger banks; looking to maximise the huge opportunity in US retail finance. They might not be moptopped Liverpudlians winning over teenage girls from the Midwest; but the opportunity is the same. Bring something new and better – make lots of money. Whilst (this being 2019), also using as many buzz phrases in their marketing as they possibly can….
Monzo has over 2.2 million unique users in the UK and growing. It is known for its known for its incredibly strong UX, ease of use, as well as a strong advertising campaign; which emphasises its cool factor over the more established banking institutions. It has launched into the US with some hoopla focussing on metropolitan areas where they can attract their similar core demographic to the UK; urban, transient, millennials. They are hiring 80 staff across the hip urban hubs of NYC, Las Vegas, LA and San Francisco. They are also creating the touchy feely factor that has been a core part of their USP. This will be achieved through face to face events, where their early adopters can meet and discuss the Monzo experience with their core leadership team; something that has been central to their UK success.
There is one minor stumbling block to this commercial fairytale – I say minor; it could be huge. They are not currently a regulated bank in the US. So the launch is in partnership with Sutton Bank, whilst they, hopefully get this sorted. They also for now won’t have Apple Pay or Google Pay functionality.
Despite these bumps along the road, this is still a profitable opportunity. Like The Beatles in January 1964 arriving at Idlewild airport, Monzo are entering a stagnant environment overtly dominated by big bloated fading megaliths, who have become mediocre through hubris. For Elvis Presley in the early sixties you can read three or four huge US banking institutions. In other words; like the UK in 2015, it is an industry that is very much open to destruction.
So where do we go from here? Is UK Fintech now going to take over the world? Well as much as this is very exciting; it is going to be a long hard slog.
The US is an inherently conservative marketplace for retail banking, where cash is still king. If you look at the figures, the US incumbent’s market share is actually growing.
Monzo’s competitors clearly see this as too big a stumbling block. With the other great pretender to the banking crown Revolut looking at proliferation into the Asia-Pac market before contemplating attempting to get a US banking licence.
These fintechs both now have huge amounts of investment behind them; investment which is looking for strong returns by growth in their user base. It was natural for them then to look for pastures and user bases beyond the safety of England’s green fields.
However it remains to be seen whether America will take them to it’s heart.
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