Monzo

Hello, fellow Olio enthusiasts! 👋

Happy Hump Day and welcome to the 35th edition of Weekly Olio - your weekly dose of giggles, wisdom, and a sprinkle of intrigue with our tantalizing thought piece (yes, we're talking about Publisher's Parmesan here). 🤭

A big shoutout to all of you for the fantastic support and feedback. Let's keep the momentum going in the days and weeks ahead! 😊

Today’s Publisher’s Parmesan talks about Monzo, a UK-based and fully regulated digital bank offering customers a user-friendly and transparent banking experience.

Exciting, right? 👏

Will come to that, but let’s first start with the curation.

Oh, and before you continue, it's time for some sponsor spotlight! Don't worry, it's not clickbait, it's just our way of 'feeling the ad-vantage'. So, do click, and help us keep the lights on and the puns rolling! 😀

This edition of Weekly Olio is brought to you by Brilliant.

Learn AI like it’s 2023

AI won’t take your job. Someone using AI will. Best time to level up? Yesterday. Second best? Right now.

Luckily, there’s Brilliant — the interactive app that makes it easy to master concepts in math, data, and computer science in just minutes a day.

Here’s how:

• They have thousands of lessons on tons of topics — from AI and neural networks to data science.

• They break down complex concepts into digestible building blocks that stick.

• Their interactive style keeps you engaged, so it’s easy to build a daily habit.

Join over 10 million people around the world and start building skills in minutes a day. You can try everything Brilliant has to offer for free for a full 30 days. Plus, right now you can get an exclusive 20% off an annual premium membership.

Want to showcase your org in a similar way? Hit the reply button and let’s chat ✌

The Quote󠀢 💭

The Tweet 🐦

Amazing thread on the story of one of the largest startup databases - CB Insights. It started as a sentiment survey around credit cards during the 2008-09 financial crisis before pivoting to become a large database on startups. Data businesses work really well if the customer segment and the timing are just right.

The Infographic 💹

What goes around comes around! This is evident in the current situation where buyers of Russian crude oil are now exporting refined oil to the West. This demonstrates a cycle where actions and decisions eventually come back to impact the same parties involved. Furthermore, the price-cap scheme implemented has generated opportunities for intermediaries or middlemen to take advantage of the situation.

The Short Read 📝

Can the West’s perplexing employment miracle continue?- by The Economist

Despite the optimistic period following the lifting of lockdowns in 2021, GDP growth across the 38 OECD countries has significantly decelerated, with some countries even experiencing negative growth. Business confidence is currently below its usual long-term average. However, there are limited indications of weakness in the labour market.

In the coming decade, the populations of affluent nations will experience rapid ageing, leading to additional strains on the labour supply. As a result, finding skilled and capable workers is expected to become more challenging. This means that even the quest for an exceptional martini maker will become more complex and demanding than it currently is.

The Long Read 📜

How Wordle brought us back together - by Experience

Wordplay in its traditional form has a long-standing history, with activities like crosswords having been a newspaper staple since the early 1900s. Scrabble, which drew inspiration from early newspaper crosswords, has been around for 84 years. However, with the advent of smartphone apps, these games have undergone a significant transformation, expanding their social dimensions. What were once individual endeavours or limited to a small group of participants have now become shared experiences within communities. Even traditionally solitary pursuits like crosswords have evolved into shared games, encouraging collaboration and interaction among players.

While Wordle may be considered an exceptionally prominent instance, it is representative of a surge in word games that have thrived on mobile devices, achieving unprecedented levels of popularity and cultural significance. The proliferation of such games has been remarkable, captivating a wide audience and leaving a lasting impact on our cultural landscape.

This week’s Publisher Parmesan is sponsored by Payset.

With Payset you can send and receive funds both locally and internationally with your dedicated multi-currency account. Make quick and easy transfers in 34 different currencies and gain real-time access to the best international exchange rates.

Want to showcase your org in a similar way? Hit the reply button and let’s chat ✌

Publisher’s Parmesan 🧀

Monzo

Monzo is a London-based challenger bank that aspires to change how banking is provided in the UK by addressing the poor service, low trust, and onerous fees frequently experienced with traditional banks. It wants to build a mobile-based financial hub for its customers. Originally the company offered financial products through bank partnerships, but as of 2017, Monzo received its banking license and became a fully regulated UK bank.

The 2010s witnessed the glorious emergence of neobanks, the digital darlings of the banking realm. These virtual mavericks offer many financial services, from the humble checking account to the mighty loan and debit card. Unlike their stuffy traditional counterparts, neobanks boast lower fees and minimum balance requirements, opening their doors to the masses. With user-friendly apps that even your technologically challenged grandma could navigate, neobanks strive to simplify and streamline the banking experience.

Introduction

Monzo, the brainchild of London's financial revolution, was birthed in 2015 by a formidable crew of visionaries. Led by the illustrious ex-CEO Tom Blomfield, the Monzo dream team also included Gary Dolman (ex-CFO), Jason Bates (ex-CCO), Jonas Templestein (CTO), and Paul Rippon (ex-CRO).

When Monzo burst onto the scene in October 2015, they were armed with a modest army of 500 alpha users. Determined to stand out from the stuffy traditional banks, the ingenious founding team pulled out all the stops to create a devoted community of customers. They knew that to win hearts and wallets, they had to showcase Monzo's distinctive qualities.

So, what did they do? Well, they weren't ones to shy away from some good old-fashioned face-to-face interaction. The team went all-in on hosting community events, rallying the troops, and spreading the gospel of Monzo. They wanted their early adopters to feel like part of something special, inviting them to invest in the company and share in its success.

But that's not all. Monzo took things up a notch with their epic hackathons, where tech-savvy enthusiasts got to flex their creative muscles using the app's API. User-generated ideas flooded in, and the team eagerly incorporated them into their ever-evolving product. Who would have thought that rounding up spare change could become a financial game-changer?

Products and offerings

Their first product, a prepaid bank card, served as both a gateway to customers and a stepping stone to obtaining the coveted banking license. It was a strategic move that laid the foundation for Monzo's future empire.

With the rallying cry of "Make Money Work For Everyone," Monzo unveiled its digital finance platform, armed with the unwavering belief that it could tackle the challenges traditional banking had failed to conquer. They envisioned a world where banking was a breeze, where convenience and transparency reigned supreme. Their app-based experience became a one-stop-shop for all things financial, from storing money and sending payments to budgeting and even accessing loans and buy-now-pay-later options. They left no stone unturned in their quest to revolutionize the banking experience.

Business model and adoption

Monzo, the champion of modern banking, knows how to make their money moves. They offer their basic accounts free of charge, with the option to unlock additional features through a subscription fee. But don't worry, Monzo's not relying solely on your monthly contributions to keep the wheels turning.

One of their secret weapons is the interchange fee, a nifty little charge imposed on merchants who graciously accept credit or debit cards. Monzo snags a portion of that fee, adding to their revenue streams. Clever, isn't it? But that's not where the money-making magic ends.

Monzo also dips their toes into the world of interest. Loans, overdraft protection, and good old deposits all play a role in filling their coffers. It's a symbiotic relationship where Monzo earns their fair share while providing financial assistance to their customers.

And boy, has Monzo made some serious strides. As of May 2023, they proudly boasted a whopping 7.4 million customers and their deposits soared to an impressive £6 billion. Talk about trust and loyalty! In 2022 alone, Monzo raked in a mind-boggling £440 million in revenue, marking a staggering 185% increase from the previous year. They even revealed that their net operating income for the year ending February 2023 reached a cool £214.5 million ($266.1 million). Impressive, right?

What fueled this financial frenzy, you ask? Well, lending took centre stage. Net interest income skyrocketed by a jaw-dropping 382%, reaching a staggering £164.2 million. Monzo's lending volume hit a remarkable £759.7 million in May 2023, as more and more customers tapped into their offerings such as overdrafts, personal loans, and the ever-popular Monzo Flex buy now, pay later service. It's a growth story for the books.

In fact, Monzo's triumphs were so noteworthy that by May 2023, they had accumulated an impressive 350,000 paid accounts. That's quite a testament to the value they provide to their customers.

Valuation

In December 2021, Monzo made headlines with a significant funding round, raising $500 million at a valuation of $4.5 billion. This round was led by the Abu Dhabi Growth Fund, adding to the list of esteemed investors that Monzo has attracted over the years. In total, Monzo has raised an impressive $1.1 billion in funding from notable investors such as Tencent, General Catalyst, Accel, and Coatue.

To put Monzo's valuation and revenue in perspective, let's compare it to Revolut, another prominent player in the digital banking space. In 2021, Revolut generated $769 million in revenue and reached a staggering valuation of $33 billion, giving it a revenue multiple of approximately 43x. On the other hand, Monzo, with a valuation of $4.5 billion in 2021, had a revenue multiple of around 24x.

However, it's worth noting that market dynamics and investor sentiment can change over time. In April 2023, an investor in Revolut marked down the value of its stake by 46% to $18 billion, resulting in a new revenue multiple of approximately 23x based on 2021 revenues. This adjustment implies that Monzo, with its $546 million revenue in 2022, would likely be valued at or below its 2021 valuation if a similar multiple were applied.

Where does the future lie?

All said and done, it's important to acknowledge that Monzo has faced criticism for its financial performance. The company has reported significant losses over the years, which has raised concerns among investors and industry observers. While Monzo remains the fastest-growing digital bank in the UK, its expansion into the US has been relatively slow compared to its domestic growth.

Furthermore, the regulatory environment poses challenges for Monzo's future prospects. It is uncertain how further regulatory scrutiny may impact the company's ability to expand into new geographical areas or introduce new products and services. The regulatory landscape can be complex and can potentially hinder Monzo's growth plans.

Despite these challenges, Monzo continues to be a prominent player in the digital banking sector, attracting a substantial customer base and securing significant funding from investors. The company's commitment to providing a customer-centric and transparent banking experience has resonated with many, contributing to its growth and market presence. However, the road ahead for Monzo will require navigating the financial landscape carefully and addressing the concerns raised about its financial performance and expansion plans.

That’s all for this week. If you enjoyed this edition, we’d really appreciate if you shared it with a friend, family member or colleague.

We know you really want to share this edition’s link. 😛 Well, we will make it easy for you. Just click on the bubble below.

We’ll be back in your inbox 2 PM IST next Wednesday. Till then, have a productive week!

Peeyush and Mohit

Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual.