Monzo's marketing boss on why people are switching to challengers
Earlier this year Monzo found itself initiated into an enviable club of fintech start ups, joining fellow 'unicorns' Stripe and Klarna with a valuation of over £1 billion after securing a further £85 million in funding.
Despite only achieving its banking licence in April last year, the mobile-only bank claims to be the fastest growing in the UK, accounting for approximately 15% of all new account openings. It has just exceeded 1.1 million customers, adding in the region of 20,000 more every week.
Not only is it outpacing all of its big name competitors, it's doing so whilst spending next to nothing on advertising.
Speaking to Mediatel, Monzo's head of marketing and community, Tristan Thomas, says the company has a rather different approach to marketing. It prefers to fuel growth by "deeply engaging" its community and, most importantly, by building a product that puts the customer first.
That's something high street banks have thus far neglected to address, he says.
"We're competing with the big banks who haven't focused on consumers or built products people want to use for literally hundreds of years."
Paper statements became online statements and then mobile statements, but otherwise high street banks have been slow to introduce features which Thomas says engage customers in their everyday lives.
With Monzo's mission statement to "make money work for everyone", transactions are instantly viewable via the app whilst notifications about spending keep customers in check. Other features include instant transfers with friends, bill splitting and the ability to temporarily freeze accounts from a smartphone.
Far from making decisions behind closed doors, Monzo relies on its customer base to keep it accountable - much like mobile operator GiffGaff. Employees directly communicate with the 'community' via its online forum, and its customers are entrusted with important company decisions - like choosing its pricing structure for withdrawals from ATMs abroad.
"Transparency, fairness and involving customers in what we're doing is why people love Monzo," Thomas says.
The rise of digital-only challengers has coincided with a marked decrease of consumer trust in traditional banks, stemming from the financial crash almost a decade ago. The crash saw the UK government bail out collapsing bank Northern Rock to the sum of billions, and a 2017 Yougov poll found that just 36% of British consumers now trust banks to work in their customer's best interests.
"That's why we're starting to see this huge shift in consumer behaviour and why so many people are switching to challengers," Thomas added.
Engaging a core community with a consumer-focused product and transparent business model has been the main driver of Monzo's rapid growth, with the bank claiming that upwards of 80% of its customers arrived via word of mouth or referral.
Meanwhile, according to Nielsen data, Lloyds Banking Group's marketing spend in the 12 months to September this year amounted to £79 million.
Future advertising plans
However, as a start-up still in early investment rounds, Monzo continues to hemorrhage money. In order to turn a profit and effectively rival the likes of Lloyds, the bank will need to ensure that it can maintain - or "supercharge" - its current level of growth.
With that in mind, the company has begun to experiment with various ad formats. Over the past few months it has conducted a number of digital advertising trials on Facebook and Twitter, and last month paid for two weeks of ads with TfL.
Monzo is working with growth marketing agency Ladder on its digital advertising and with Talon on out of home buying, though it's keen that for now, creative remains in-house.
"When we were small and executing on a much smaller scale, we were quite anti-agency," Thomas says. "It felt like we should always hire in-house, because someone will know the brand better and be able to move more quickly."
"We still tend in that direction, but you have to be realistic. Agencies can provide real value at times - whether that's getting up and running quickly, giving us expertise that we couldn't hire in-house, or thinking about new markets."
However, Thomas says that no matter how tempting, Monzo won't become a company that spends "crazy amounts of money on adverts that don't deliver."
The last time Monzo invested considerable cash into advertising was in 2016, when it took over Old Street station and ran its first shopping event. A quick snoop on its community forum reveals that it had minimal effect on user growth.
"We will invest money in advertising where it makes sense for us as a business," says Thomas. "If we can bring new users onto Monzo who really like us through advertising - who use us every day and who we provide value to - then great. As long as we can continue doing that, we will put budget into it."
“But at the same time I think it’s really important that we don’t lose sight of the core of our growth, which is community engagement and building a product that people actually want to use.”
Apart from making finance a stress-free, easy experience for consumers, Monzo is also designed to increase financial inclusion. Close to two million adults across the UK are without bank accounts, with many of those people either homeless or asylum seekers. Bank accounts act as a gateway to society; lacking one prevents people from finding jobs or homes.
"We have the ability to help that," Thomas says. New sign ups to Monzo need nothing more than a UK drivers license.
"I think the time has passed where companies - tech companies, especially - can claim that they are independent of society and don't need to think about whether the impact they have is positive or negative," he says.
"With big companies like Facebook and Google, their impact on the world has been huge. And when they don't think things through properly, the negative consequences can also be huge.
"As a company that has the ambition of getting to that sort of scale, we need to be aware of that and proactively thinking about how we ensure that the impact we have is a positive one."
Tristan Thomas was a speaker at MAD//Fest - a two day marketing and innovation festival, backed by Mediatel.