26Apr Monzo – 7 Lessons From A Truly 3D Bank!
I opened a bank account this morning in 3 minute 24 seconds from the comfort of my own desk! Now, THAT’S being Easy To Buy From which is a key ingredient of 3D Characteristic #3: Create Delighted And Devoted Customers and Monzo Bank is a Dramatically and Demonstrably Different bank that went from 50,000 customers to 500,000 in 10 months!
This disruptive business is led by 32 year old entrepreneur Tom Blomfield, and he and his team are definitely going places. Having read about him in an article in The Times a couple of week’s ago, we then went along to a little event he was running at his headquarters in Shoreditch in London on Monday where Tom was giving an update on progress and sharing his plans for the future.
The room was packed full of people who it turned out, weren’t employees, other young entrepreneurs looking for lessons in leadership or investors and business advisors, but they were CUSTOMERS – all keen to know what was happening next! (They were nearly all under 30 – we were the oldest there!).
Talk about a ‘tribe’ of people who had a passion for the business… they hung on Tom’s every word, and it was quite clear that they had bought into what he was doing… and it was quite clear to see why. There were so many lessons for anyone (everyone?) in business and here are just 7 of them…
Lesson 1: Get That Vision Thing!
Tom’s passion and clear aspirational picture of the future was every evident. His vision is to create a single control for all your money and he wants to do it in a Dramatically Different way – from your smartphone! He says he wants to be a category changing business (although, in his truly self deprecating manner said that he knows that sounds like some wanky start up founders phrase!). He started off targeting young male techie professionals in London, but that has now become UK wide and is currently growing at 60,000 new customers a month!!!
The immediate focus is ‘profitability’ and having reduced their administration costs for running an individual account from £62 to £6.50, they are clearly ‘on target’. Longer term, he talks about financial inclusion: making sure anyone can get a bank account, whether they’ve been bankrupt, in prison or are a refugee. Apparently, there are something like three or four million adults in this country who can’t get a bank account and pay a lot more for the basics than they should and he wants to end that in the UK. That’s the goal… for now. Then it’s America!
Lesson 2: Create Raving Fans Who ‘Buy In’ To Your Vision!
It’s clear that a real success factor for this business is the ‘tribe’ that they have built (and are continuing to build). As Tom explains “We believe the best way to build a great product is by launching it early and improving it based on feedback from real people. I feel very lucky that we have a community of users that care enough to share their enthusiasm, ideas and frank feedback with us. They’ve helped us make Monzo what it is today, and I’m glad that so many people have chosen to join us for what’s next.”
The business started as a ‘beta’ model and offered itself as a prepaid card with people using it as a secondary account alongside their traditional account. Tom appealed to his customers asking them to establish their prepaid cards as ‘proper accounts’ earlier this year and 94% of active users upgraded! They’ve clearly ‘bought in’ to what the business is trying to achieve. In fact, last year, they got commitments of over £12 million from those customers via crowdfunding – unfortunately, legalities meant that they couldn’t access that funding, but it’s clear that the ‘buy in’ was there.
Lesson 3: Know Who You’re Competing With!
Tom doesn’t see his competitors as other start up banks but the ‘apathetic’ big banks and that’s who he’s targeting. He talked about getting rid of all the bullshit that goes with banking, being your financially savvy friend and doing things that ensures it all works easily – the things he says is the opposite of what’s on offer at the moment from established banks.
It’s all about being 10 times better, he says and in some areas that not difficult because of the apathy demonstrated by the banks. As a result, he has identified the ‘pain areas’ that customers have with banks and Monzo strives to alleviate that pain. The result is a very prompt, user friendly customer experience at every touch point.
Lesson 4: Choose ‘Em Or Lose ‘Em!
Like the best 3D Businesses, Monzo has started with a clear focus in terms of its customers and what it does and doesn’t offer. Tom explained that they will not be offering ‘standard’ products such as mortgages and credit cards like other banks – he is avoiding ‘homogenised’ products because a) they cost more to manage and administrate and b) add complexity. He knows what he stands for and isn’t afraid to say ‘no’.
As mentioned, the initial focus is on digital savvy young professionals. When asked about expansion by one of his (disappointed French) customers, he said that he had no plans of developing in France (or any other European countries) again because of complexities of translation and legalities – the focus is on ‘English’ speaking countries!
Lesson 5: Be ‘Dramatically and Demonstrably Different‘!
Monzo has ripped up the rule book when it comes to banking (although there are obviously lots of ‘legal rules’ they have to follow), and their ‘bundle’ of skills, methods and practices that differentiate them include: being incredibly easy to apply and use, no branches, very, very clear charging fees, summary statements that categorise what you’ve spent your money on and helping you budget, free withdrawals when you are overseas, the ability to freeze your account by phone if you lose your card, 50p a day overdraft charges meaning you never pay more than £15.50 a month and an ability to sign up in minutes from wherever you want – I did it at my desk and all I needed was my driving licence which I photographed and a 5 second video I did of myself on my iPhone!
Lesson 6: Demonstrate That ‘Dramatic Difference‘!
From their colourful and quirky branding through to the physical process of signing up, it’s clear that this is a ‘Dramatically Different‘ banking experience that has been thought through from a customer’s perspective. The messaging when you sign up is friendly – for example the pink card cartoon card is holding a sign saying ‘I’m on my way’! There are tools that help you budget and manage your money, and they will help you switch your account to them in 7 days. You simply give them your details and they do all the work ….in 7 working days guaranteed – Any problems and they pay! You can even send someone an emoji to say thank you when they’ve deposited money in your account!
Even Tom’s very short video showing the rapid expansion and accumulation of customers with a map of the UK lighting up by customers ‘signing up’ did the job – this is a business that’s clearly going places. (Check that out here – it’s really impressive!)
Lesson 7: Create Dialogue With Your Customers
There are forums on the website for customers to make suggestions and contribute to the development of the business. The ‘open meeting’ that we attended demonstrated this too – they’ve clearly got ‘raving fans’ who care. Tom explained that the more transparent they are, the stronger the bond with his customers. For example, Monzo’s ‘free withdrawals’ abroad costs the business more if people do lots of small withdrawals over the month than one big one, so they explained this to their customers in a forum and via the website – lots of customers stopped doing it, and just did one withdrawal to help them out!
The business is only 3 years old and clearly there’s a long way to go. Monzo raised £71 million in a fundraising round last November, so it’s clear that there are lots of people there with them to help it happen. There are exciting times ahead…. and I don’t just mean my new card that will be delivered on the 30th!
Breaking News… And An Extra ‘Lesson’….
My card arrived today! That’s 2 days ahead of schedule and Lesson 8: Exceed your customer’s expectations – that’s ‘Customer Delight’ in action!