The magic of Monzo: leading a challenger bank in times of crisis

What is abun­dant­ly clear about TS Anil, glob­al chief exec­u­tive of Mon­zo, is his pride in the UK chal­lenger bank and its dis­tinc­tive cul­ture. Dis­cussing the hur­dles fac­ing the busi­ness this year, Anil attrib­ut­es its sub­se­quent suc­cess to the strength of his staff, the bank’s mis­sion and what he describes as “the mag­ic of Mon­zo”. His pas­sion for the com­pa­ny can­not be over­stat­ed. “Our pride comes from the fact that we are doing the right things for our cus­tomers,” he says. 

Born in India, Anil attend­ed the pres­ti­gious Indi­an Insti­tute of Man­age­ment Ahmed­abad. To Mon­zo, he brings more than twen­ty-five years of bank­ing expe­ri­ence, with roles at Visa, Citibank, Stan­dard Char­tered and Cap­i­tal One. The vet­er­an banker replaced Monzo’s co-founder Tom Blom­field in May 2020 after a stint as chief exec­u­tive of Mon­zo US.

Building profitability as a neobank

Now Anil faces the cru­cial task of set­ting Mon­zo on track to be both prof­itable and sus­tain­able. A goal which, he says, is not new to the busi­ness.

“The rea­son to be prof­itable is so you can con­tin­ue to ser­vice mil­lions of cus­tomers and con­tin­ue to grow. If you’re not prof­itable, you sim­ply can’t do that. We aren’t build­ing some­thing for the short term; we want Mon­zo to be around for­ev­er,” he says.

Anil stress­es that this prof­itabil­i­ty should not come at the expense of cus­tomers, through penal­ty fees, for exam­ple. Instead, Mon­zo is aim­ing to build a mod­el that meets the needs of con­sumers and in pro­vid­ing “prod­ucts that tru­ly delight them”. 

The fin­tech made good head­way with this goal dur­ing the pan­dem­ic, relaunch­ing Mon­zo Plus in July 2020 and intro­duc­ing Mon­zo Pre­mi­um the fol­low­ing Octo­ber. Across these schemes, the neobank gar­nered more than 130,000 cus­tomers between Sep­tem­ber 2020 and Feb­ru­ary 2021.

Night and day: incumbent banks versus challengers

So what is dri­ving this extra­or­di­nary suc­cess? One pos­si­ble answer is all too obvi­ous: the unde­ni­able com­pet­i­tive advan­tage of being dig­i­tal first. Com­par­ing neobanks to tra­di­tion­al bank­ing struc­tures is like “com­par­ing night and day”, says Anil. “For bank­ing ser­vices, to not have been dig­i­talised is to have been lag­ging. 

“We get the bal­ance right in con­tin­u­ing to be a fast-paced tech­nol­o­gy com­pa­ny while also oper­at­ing at scale and being a reg­u­lat­ed bank.”

Tra­di­tion­al banks have, how­ev­er, recog­nised the com­pe­ti­tion in fin­techs such as Mon­zo. JPMor­gan Chase recent­ly announced the open­ing of a dig­i­tal-only bank in 2021, hot on the heels of Gold­man Sachs which launched Mar­cus, an online sav­ings account, in 2018.

Mon­zo sits along­side sev­er­al UK chal­lengers, includ­ing Rev­o­lut and Star­ling Bank, each of which Anil believes have “shak­en up and dis­rupt­ed the incum­bent bank­ing indus­try”. When it comes to these poten­tial rivals, he wel­comes the com­pe­ti­tion, believ­ing their pres­ence push­es each com­pa­ny to raise their own stan­dards of ser­vice.

“If some­one tells me a bank is doing some­thing sim­i­lar to Mon­zo, I actu­al­ly applaud it because that means our strat­e­gy is work­ing. We set out to make mon­ey work for every­one. It rais­es the bar for the whole indus­try,” he says.

How Monzo thrived through the crisis

This year, how­ev­er, has brought chal­lenges for chal­lenger banks. The coro­n­avirus pan­dem­ic placed Monzo’s abil­i­ty to con­tin­ue oper­at­ing in per­il. World­wide lock­downs led to a lack of trav­el and less cus­tomer expen­di­ture abroad. 

In mid-2020, like many of its peers, Mon­zo fur­loughed some 300 employ­ees. Hard­er still, their Las Vegas cus­tomer sup­port office was shut down in April 2020, result­ing in the loss of 165 jobs.

In spite of this, Anil believes they are a stronger bank for all the tests that COVID-19 has thrown their way. “The COVID cri­sis test­ed us and we’ve come out sig­nif­i­cant­ly stronger. That is super excit­ing to see,” he says, remain­ing opti­mistic about the bank’s future.

“In the time of COVID, we launched three new prod­ucts, with each of them doing bet­ter than we expect­ed them to. Our rev­enues are now 30 per cent high­er than they were at pre-pan­dem­ic peaks, despite the fact that there are enor­mous head­winds from a rev­enue per­spec­tive.”

Con­cur­rent to the tur­bu­lence caused by the pan­dem­ic, Monzo’s val­u­a­tion fell by 40 per cent. At the dis­count­ed rate, the bank raised around £60 mil­lion in fund­ing in June 2020. That Decem­ber a fur­ther £60 mil­lion was raised, plac­ing its val­ue at more than £1.2 bil­lion, with new back­ers includ­ing Nova­tor, Kaiser and TED Glob­al. 

The onslaught of fund­ing is said to have been raised due to the per­for­mance of the bank despite the COVID chal­lenges. The increase in cus­tomers even dur­ing the pan­dem­ic meant investors felt con­fi­dent enough in the bank to part with vast sums.

Commitment to the customer

What Anil believes tru­ly sets Mon­zo apart is the bank’s stead­fast empha­sis on the peo­ple they serve: their cus­tomers. “Coro­n­avirus pos­es a dif­fi­cult envi­ron­ment for our cus­tomers,” he says. “We had to ensure to be there for our vul­ner­a­ble cus­tomers and make sure we had to be there through their time of pain.”

This com­mit­ment to cus­tomers, and the finan­cial issues that can plague them, can be seen very clear­ly in Monzo’s “gam­bling block”. This fea­ture, of which Anil is tremen­dous­ly proud, allows users to self-exclude from gam­bling, in a time when this par­tic­u­lar addic­tion is on the rise. Since its launch in 2018, a quar­ter of a mil­lion Mon­zo cus­tomers have enabled it. 

Not con­tent with fea­tures on its plat­form, Mon­zo is now lob­by­ing the gov­ern­ment to require all UK banks to enable cus­tomers to block bet­ting trans­ac­tions. So far eight oth­er banks cur­rent­ly offer some form of a gam­bling block or sim­i­lar tools, but Mon­zo is urg­ing the indus­try as a whole to fol­low suit.

What the future holds for neobanks

Anil says Mon­zo is see­ing a steady increase in peo­ple choos­ing it as their pri­ma­ry account. Many cus­tomers get a Mon­zo card as a tri­al, lat­er find­ing them­selves switch­ing to the bank per­ma­nent­ly. 

Before the pan­dem­ic, many were reluc­tant to join Mon­zo due to the lack of phys­i­cal branch­es, a reser­va­tion that has since been large­ly swept away. The dig­i­tal­i­sa­tion of cus­tomers’ lives increased, Anil explains, and this now applies to their finan­cial pref­er­ences too. “Dur­ing the pan­dem­ic, peo­ple world­wide expe­ri­enced a tru­ly dig­i­tal life,” he says.

All in all, the future looks promis­ing for the glob­al chief exec­u­tive. “I feel very blessed to be at a com­pa­ny where the cus­tomer is always at the heart of what we do,” says Anil. “We are at a stage where we are large enough to mat­ter to all con­stituents and that comes with respon­si­bil­i­ty. It’s not some­thing we take for grant­ed.”