Monzo is a smart-phone only digital bank – sometimes called a ‘Neobank’ in some news articles. I’ve been using it over the last few months and wanted to share it with P2PBlog readers particularly as a smart way to spend money (and save fees) when travelling abroad. It’s probably not one for those who are cautious of sharing their private data with 3rd parties, but there are some key benefits of using the app which I will cover in this review. For the time being, the major draw is no fees on foreign cash withdrawals, though unfortunately this may be about to change.

How Does Monzo Work?

It’s a prepaid card – so you transfer money by bank transfer or card deposit and it goes into your digital Monzo account. You can then use your associated Monzo debit card to withdraw money at an ATM or to pay directly for goods/services.

What is the Point?

The main reason I took out a Monzo card was to use abroad. At the moment there are no fees on foreign cash withdrawals (at least on the Monzo end). Monzo recently had a public vote on the need to introduce some sort of fees to cover their costs (link). One popular solution would be to have a limit of free withdrawals per month, and then charge beyond that. For now it’s still free.

Also there are no fees on foreign currency purchases. After a recent holiday I was surprised to look into the details of my Natwest account to see a £1 charge on every transaction – which made a bunch of 4 euro Uber journeys a lot more expensive! As soon as you make a transaction with your Monzo card, you see the price in the foreign currency and an estimate of the GBP price.

Monzo Registration Process: The Monzo Waiting List

This is probably the worst thing about Monzo: they seem to put you through a long waiting list process before you can join just for the sake of it. I first registered/ downloaded the Monzo application on April 18th but had to wait on the Monzo waiting list until the 27th April before they would post the card and let me deposit money. I think at first I had 15,000 or 20,000 people in front of me in the queue. I think they do this on purpose to create a sense of scarcity and to encourage you to invite friends. You can skip a number of places in the queue by referring other friends to download the app and register. As I needed the card for a holiday, I invited myself on different old phones with old email addresses, which also worked fine to queue-jump.

User Experience: Positives

Low Fees Abroad

For the time being, you can withdraw cash abroad for free, and have no fees on foreign transactions. I feel like I am constantly moving from bank to bank looking for the latest one without fees on foreign cash withdrawals, so hope that they keep it free way for as long as possible.

Double Check Purchases Instantly

I’m not sure if it’s just me, but after hearing stories of credit card fraud/ similar at restaurants and bars I’m always a bit cautious that they might overcharge me at the till. With Monzo I have an instant notification of the charge, sometimes even before the card machine has finished printing off the receipt.

After looking through the transaction list from a recent holiday, I noticed a really strange transaction of 0.14 EUR. I was sure that I hadn’t bought anything for 14 cents so wondered what it would be. If it were a normal bank, I’d probably just have a very basic transaction line on my online banking account. Fortunately because it was Monzo, I had the exact time, and a map with the location of the purchase so I could put two-and-two together. In this case, the person at the till had made a mistake with the decimal point and charged 14 cents rather than 14 EUR!

Keep on Top of Spending

Monzo does a great job at auto-categorising each transaction into one of these categories:

You can then view an overall breakdown like this:

From here you can drill further into the specifics, showing an overview by day and from here clicking into individual items. On a particular spending item, you can add a written note or attach a photo (for instance, a receipt):

As it is a prepaid card, you don’t risk spending more than you have. If someone were to steal money or overcharge, the worst they could do is clear the amount loaded. If you do lose the card, there’s a simple option within the app to report it lost/stolen – rather than having to go through the stress of looking for a number to call and waiting on the line to cancel. For me, I’ve just kept a small balance, and find it just takes a few seconds to put more on via debit card from my main bank.

Split Costs Between Friends

I haven’t tried this, but apparently it lets you easily share the bill between friends:

User Experience: Negatives

The Monzo debit card is bright orange. Not so great if you want to avoid attention!

For the time being, there are no features like bank transfers or an overdraft. I think some of this may be in the pipeline for the future though, I’d love it if it allowed to do cheap bank to non-UK bank transfers (for EU P2P lending platforms).

I haven’t seen a way to export any of the data that is being collected – I’d like to have a .csv or excel download file I could use myself. Maybe I’m over-cynical, but it probably serves to keep people using their app if they can’t export historical data to a competitor!

Data privacy and security issues. I’m not sure how they are using the data, and if I ticked some terms and conditions somewhere that allowed them to pass it to a 3rd party. If you are worried about data, especially given the constant news of hacks, then this may be a step too far. However, as the recent Equifax hack shows, no matter how careful you are with your data someone will probably leak it for you anyway!

Smart Banking & The Future of Banking

Monzo is one of the fore-runners at the front of a revolution in personal banking. Once you start to get used to some of the features on the app, it will make your traditional online banking look as dated as the cheque-book! I’m sure that there will be a number of 3rd party plugins building upon these next generation banks and open data initiatives. One of these 3rd party apps is called ‘Dust’, an app that rounds up transactions on Monzo to the nearest pound, stores it until it reaches £10, then buys cryptocurrency like Bitcoin or Ethereum for you via Coinbase.

Monzo’s strategy appears to make their users feel as involved as possible. So for instance instead of just adding fees for foreign cash withdrawals, they are going through a consultation period with users, explaining the necessity and letting them vote on some options for how to implement it. Also, when you talk to customer service it opens up a whatsapp-style chat window.

Revolut: A Possible Alternative

Revolut is another digital only banking app or ‘Neobank’. I don’t know that much about them (and haven’t used them), but on first glance it appears that they offer a similar service to Monzo. So, if Monzo start to introduce fees on foreign cash withdrawals perhaps Revolut could be worth looking into in more detail.