We’re getting out and about on our (highly metaphorical) bikes at Kyan and speaking to people and businesses we think are doing great work.
In the first of this series of Q&A style interviews is challenger bank, Monzo. Last week I sat down with Thomas George, Head of Risk at Monzo to talk about the latest product developments and stories from the team.
Thomas George – Head of Risk, Monzo
Congratulations to everyone at Monzo on receiving your banking license. Was that the objective from day 1, or was that something that became possible as Monzo took off and built a solid user base?
This was always our goal, we set Monzo up to become a new kind of Bank that we’d want our friends and family to use.
Can you talk about some of the work that went into achieving the banking license?
So about two and a half years ago we kicked off the process.
Initially, you have a series of meetings with the UK regulators the FCA and PRA, and then you make a formal submission.
After that, there’s a period of challenge and feedback with the regulators, as they spot potential issues or things they want to know more about.
In August 2016 we were granted a full UK banking licence, but that came with restrictions that prevented us from taking deposits from customers. That was essentially more of a testing phase.
Then in April 2017 we had those restrictions lifted so that we could start rolling out current accounts — we’re currently testing these with a small group of early adopters and we’re then rolling them out properly throughout the summer.
** note from author — on the day I visited Monzo, they were actually welcoming some of the first Monzo current account holders to explain the current (unfinished) product and provide a bit of a walkthrough.
What goes into maintaining that license?
We now have a continuous dialogue with the regulator, providing regular reporting and updates. For now, a lot of the core Monzo product is quite traditional in the eyes of regulators. Things like allowing customers to use smartphone photos of ID documents as part of the registration process isn’t going to rock the boat in terms of regulation.
Once we reach a stage where we’re pursuing and introducing more ambitious (and potentially seen as untraditional) partnership schemes to deliver an even better product, we’ll have to work hard on making sure the regulators understand how and why these work.
The startup journey is difficult enough outside of industries as regulated as consumer banking. How do you balance the intense regulation in your industry with product innovation?
I think this really comes down to some of our core principles.
Focus on Customers relentlessly
Take everything back to First Principles
Structure a team around our objectives and not the expectations of others
Execute iteratively and rapidly
Can you elaborate a bit on how you embed those principles at Monzo? Are these formalised anywhere?
We go through this a lot in our onboarding process with new employees. It’s about wanting to make a difference in people’s lives. We want to make a bigger impact, faster. It’s also about maintaining complete transparency with Monzo customers and about really valuing our team.
What about building around objectives rather than expectations. Is there a tangible example of how your team is structured differently than people might think?
There are a few examples I think of straight away. We don’t have a distinct ‘IT Team’ at Monzo. So, rather than having a team of engineers, we have engineers in all our teams. This means whether it’s lending, the app or anywhere else across Monzo — we’re able to quickly and easily build as every team has a deep understanding of what’s required and the technical ability.
There’s obviously a huge focus on our app, but we think a huge strength moving forward for us will be our ability to build internal tools that help us work smarter and more efficiently.
The Monzo team must have grown a great deal in the past year or so. How do you maintain a distinct culture in that kind of hyper growth environment?
This is hard! We’ve gone from a team of about 40/50 to somewhere around 120 in the past year. It was really important for us when we were looking for a new office space recently to try and find somewhere that would allow everyone to be in the same building.
We still have weekly team meetings to establish what’s working well and how we can accelerate that. We’re also a very sociable business and we have regular socials and team events. It’s inevitable there will be some level of change as a business grows that quickly, but we’re doing our best to keep all the things we love about working here.
Why do you think traditional financial institutions have struggled to keep pace with customer expectations when it comes to technology? To what extent is that down to risk aversion do you think?
Legacy infrastructure is the biggest item for sure. There’s a lot of banks out there doing great stuff, but there’s also a lot of barriers they face in trying to innovate that you just don’t have as a startup.
There’s an element of protectionism towards existing revenues. Banks don’t want to eat into money they’re already making. They also have a far greater need to make maximum profit compared to an earlier stage business.
Risk aversion is definitely a part of it too!
Where do you see Monzo in 5 years?
Ideally with millions of customers both here in the UK and around the world, changing the way that people think about their bank, and making money easier and more understandable. Fingers crossed!
So post banking license, what’s the next big step or ‘landmark’ for Monzo?
Pretty much the full launch of the current account. That’s coming later this summer or early autumn once we’re really happy with the product, and have tested it with a few 1000 or 10,000 early users. Then we’ll start to accelerate the launch, giving more people the chance to move to the full current account as soon as possible!
What should people be excited about with the current account?
It fills all the gaps that were missing with the original pre-paid Monzo card. Direct debits, standing orders — all the stuff that doesn’t necessarily sound exciting to list off, but that we’re confident we can deliver better than anyone else. Things like overdrafts can be quite scary, but we’d like to make them more accessible and understandable. If we can pre-empt people going into an overdraft with a timely notification for example (assuming they don’t want to use it), that's a really useful service.
A lot of the existing things we’re always working to improve become a lot more powerful when a salary is added. Budgeting, for example, becomes contextual, so alerts can be based on understanding how much your total is for the month and can offer more utility for each person a lot better.
There’s a number of mobile-first banks in the sector now — how will your team make sure that it’s Monzo that stands out from the crowd?
I think there are some key things here in terms of how Monzo will continue to stand out.
Our development approach — test fast, iterate, develop, and improve. That's a big one.
The quality of our customer service is hopefully a big one too — we feel like our team really care about customers, and we want to stand out for having great customer service.
Our technology is all built in house as this gives us the most flexibility and control and scalability.
In addition to a number of successful funding rounds now, Monzo broke the crowdfunding record in 2016, raising £1 million in just 96 seconds. Why do you think there’s that kind of enthusiasm and support behind the brand?
Good question. By that point people had been using Monzo for some time. So there was enough direct experience for people to build in confidence and to have enjoyed having their card.
I think there’s something wider though too. There’s a broad feeling of the need for an alternative to existing banks, and to some extent we’re in the right place at the right time in terms of the available technology (smartphones) and the growth of on-demand services. A lot of work has already been done by businesses like Uber and Airbnb in changing attitudes towards using a new service.
Monzo’s brand voice stands out in Finance, being so informal. Why do you think this has resonated so well?
I’m not sure it’s necessarily about being informal. We’ve always been committed to presenting people with the facts. We want to explain what we’re planning and why. If something hasn’t worked as well as we’d liked, we’ll explain why and what we’ve learned. I think people appreciate the honesty.
There’s also a fun and nerdy element to how we communicate that you won’t get in many places. If people want to delve into some of the code of how we’ve built certain things, we share that too!
I saw you’ve implemented Machine Learning into your help service. Is this something you’re looking into more broadly at Monzo?
Our data team have done a great job building that into our help system. We’re still in the early stages of how we might use it, but it’s cool that we’ve already built semantic understanding of certain concepts like countries or ‘wife’, or ‘friend’ into our help system.
Our top level view of machine learning could be summarised as ‘cyborgs over robots’. We want to empower people to do their jobs better, rather than fully automate services.
Enjoyed reading this interview? You can find all of our other interviews here