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Know the Monzo Business Model

Know the Monzo Business Model

Aug 7, 2023 12:39PM

Monzo IPO

Monzo Bank Ltd., founded in 2015 as Mondo by Tom Blomfield, was one of the first app-based challenger banks in the UK. It is now one of the UK's most successful and famous digital banks. Monzo's model of business has been an enormous success. Today, we will dive deep into the Monzo Business Modelto answer the most frequently asked question, "How does Monzo Work?" We will also go into detail about its revenue model. Let's start now.

Monzo: The Beginning

Monzo was founded by Tom Blomfield in 2015. Jason Bates and Jonas Huckestein joined him. Paul Rippon and Gary Dolman also contributed. The UK-based company is focused on creating an integrated financial hub that allows users to manage their financial needs. In 2016, a few months after its launch, the company broke the "quickest crowdfunding campaign ever" record by raising PS1 million via the Crowdcube platform in just 96 seconds. It increased and reached PS1 billion in October 2018, a few months after its launch. Monzo has now achieved "Unicorn status," much before it reached a valuation (in 2019) of PS2 billion. The company has attracted millions of UK customers and raised over PS400 million.

In the beginning, Monzo was known as Mondo. However, a blog post published by Monzo in June 2016 announced that a competitor with a name similar to Mondo had legally challenged "Mondo." In August 2016, the company registered under "Monzo Bank Ltd."

Monzo Expansion

Monzo announced on June 13, 2019 that it would begin offering its service in the United States. As such, no launch date has been provided. As a promotional stunt, Monzo announced that it would give away 2000 debit cards to customers attending events in the US.

Monzo's expansion in the USA has not been easy. In the US, the regulatory environment is more complex than in the UK. The financial technology industry is regulated nationally in the UK, and British regulators are friendly towards such companies. This is not the case in the US. In the US, technology regulation is done at the state level. The company faces a highly competitive environment, including layers such as PayPal and SoFi. Many other traditional banks are also heavily investing in digital platforms. According to the latest report, Monzo has not yet opened its doors in the US.

Monzo Business Model

Monzo is a new bank that offers a variety of financial products for both consumers and businesses. Let's first understand what a Neobank is and its services.

Monzo allows users to open an account without visiting a bank branch. The performance includes a contactless Mastercard debit card that can be utilised for everyday transactions.

The Monzo app's emphasis on real-time notification is one of its key features. The Monzo app sends users instant notifications on their phones for each transaction they make using their cards. This allows them to keep track of their spending. These notifications provide security as they can identify and report unauthorised activities.

Monzo's app provides detailed insights into spending, including categorising transactions and visual representations. The app helps users better understand their spending habits and make more informed decisions regarding their budgets and saving goals. Monzo offers users budgeting tools that allow them to set spending limitations and receive personalised reminders to stay on track.

Learn how to create an app similar to Monzo and the secrets behind its rise to prominence in the banking industry.

Borrowing Monzo

Monzo Flex

According to the latest news, Monzo Flex is the latest product that Monzo has introduced in the BNPL (Buy Now and Pay Later) market. Users can spread the cost of their purchases over three months without paying interest. There is also a 6-month and 12-month option with a 19% interest rate.

The Monzo Flex feature allows users to purchase almost anything, as long as it is worth more than PS30 but less than PS3000. Cash withdrawals are not allowed for gambling or crypto. In 2020, the UK data estimated that there would be PS2.7 billion worth of BNPL transactions, with 5 million users using BNPL since the start of the pandemic. The Monzo Flex has several features.

  • You can buy anything using Monzo unless it costs more than PS30 but less than PS3000.

  • Select the transaction to be flexed and tap it.

  • Select your payment plan. Monzo will take the first payment immediately and the subsequent installments on a monthly schedule until the entire amount is paid.

Monzo Overdrafts

Monzo IPO

Monzo Overdrafts are an excellent option for those who need to borrow some extra cash to get them through. These overdrafts can be used for short-term borrowings and cost less when you pay them off quickly. Here are some of the features that Monzo offers for its overdrafts:

  • Depending on your credit rating, Monzo will charge you a rate between 19% and 29%, or 39% EAR, for any overdrafts you take out.

  • You could be eligible for an overdraft of up to PS1000 if you are an account holder. You can change the limit later and cancel your overdraft using the Monzo app. You will have to repay the money you borrowed, plus interest.

  • Monzo does not charge extra fees when going into an overdraft. They also tell you precisely what you're doing.

Monzo will not allow you to withdraw money if you exceed your overdraft limit. In this case, online payments are allowed. If you are in an unarranged overdraft, the company will charge you the same rates as your arranged account. They will also cap the charges at P15.50 per month so that you won't pay more.

How Does Monzo Make Money?

Let's first understand what a "business model" is. A business model is how a company generates revenue and creates value. It comprises several components: the value proposition, revenue streams, and target market.

Let's now talk about the business model that makes Monzo so interesting. Monzo is a digital bank that offers a wide range of banking products through its mobile application. Customers are attracted by their seamless, user-friendly service.

If you plan to create an e-wallet app, consider the Monzo Business Model. It offers several revenue-generating methods to maintain its operations and generate profit.

Monzo is a company that develops eWallet apps. Monzo's primary revenue streams are:

Interchange Fees When Monzo users purchase with their Monzo cards, the merchant will pay an interchange fee to the card issuer. This small fee, a percentage of each transaction's value, contributes to Monzo's revenue.

  • Overdraft Fees

    Monzo allows its users to borrow money up to a specific limit. Monzo charges interest to users who use their overdraft, generating revenue.

  • Monzo Plus Subscriptions

    Monzo has two premium subscription plans: Monzo Premium and Monzo Plus. These plans offer additional features like travel insurance and improved budgeting tools. These plans are paid for by subscribers every month, monthly, or annually, which brings recurring revenue to Monzo.

  • Marketplace Partnerships

    Monzo's marketplace has partnered with third-party service providers to provide financial products and services. These partnerships give Monzo users access to additional financial services and products, such as savings accounts, investments, insurance, or utilities.

  • Interest on Savings

    Monzo enables users to create savings accounts within their accounts to deposit funds and earn interest. Monzo can generate revenue from these investments and interest.


Encrypted Technologies' innovative and capable workforce has developed the best solutions for you if you want to launch a digital-only bank platform like Monzo. We can customise and innovate features to meet your needs to launch a successful digital-only bank platform.

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