The magic of Monzo: leading a challenger bank in times of crisis

Monzo boss TS Anil believes the spirit of neobanks is their emphasis on the customer, which has stood them in good stead during the pandemic

What is abundantly clear about TS Anil, global chief executive of Monzo, is his pride in the UK challenger bank and its distinctive culture. Discussing the hurdles facing the business this year, Anil attributes its subsequent success to the strength of his staff, the bank’s mission and what he describes as “the magic of Monzo”. His passion for the company cannot be overstated. “Our pride comes from the fact that we are doing the right things for our customers,” he says. 

Born in India, Anil attended the prestigious Indian Institute of Management Ahmedabad. To Monzo, he brings more than twenty-five years of banking experience, with roles at Visa, Citibank, Standard Chartered and Capital One. The veteran banker replaced Monzo’s co-founder Tom Blomfield in May 2020 after a stint as chief executive of Monzo US.

Building profitability as a neobank

Now Anil faces the crucial task of setting Monzo on track to be both profitable and sustainable. A goal which, he says, is not new to the business.

“The reason to be profitable is so you can continue to service millions of customers and continue to grow. If you’re not profitable, you simply can’t do that. We aren’t building something for the short term; we want Monzo to be around forever,” he says.

Anil stresses that this profitability should not come at the expense of customers, through penalty fees, for example. Instead, Monzo is aiming to build a model that meets the needs of consumers and in providing “products that truly delight them”. 

The fintech made good headway with this goal during the pandemic, relaunching Monzo Plus in July 2020 and introducing Monzo Premium the following October. Across these schemes, the neobank garnered more than 130,000 customers between September 2020 and February 2021.

If someone tells me a bank is doing something similar to Monzo, I actually applaud it because that means our strategy is working

Night and day: incumbent banks versus challengers

So what is driving this extraordinary success? One possible answer is all too obvious: the undeniable competitive advantage of being digital first. Comparing neobanks to traditional banking structures is like “comparing night and day”, says Anil. “For banking services, to not have been digitalised is to have been lagging. 

“We get the balance right in continuing to be a fast-paced technology company while also operating at scale and being a regulated bank.”

Traditional banks have, however, recognised the competition in fintechs such as Monzo. JPMorgan Chase recently announced the opening of a digital-only bank in 2021, hot on the heels of Goldman Sachs which launched Marcus, an online savings account, in 2018.

Monzo sits alongside several UK challengers, including Revolut and Starling Bank, each of which Anil believes have “shaken up and disrupted the incumbent banking industry”. When it comes to these potential rivals, he welcomes the competition, believing their presence pushes each company to raise their own standards of service.

“If someone tells me a bank is doing something similar to Monzo, I actually applaud it because that means our strategy is working. We set out to make money work for everyone. It raises the bar for the whole industry,” he says.

How Monzo thrived through the crisis

This year, however, has brought challenges for challenger banks. The coronavirus pandemic placed Monzo’s ability to continue operating in peril. Worldwide lockdowns led to a lack of travel and less customer expenditure abroad. 

In mid-2020, like many of its peers, Monzo furloughed some 300 employees. Harder still, their Las Vegas customer support office was shut down in April 2020, resulting in the loss of 165 jobs.

In spite of this, Anil believes they are a stronger bank for all the tests that COVID-19 has thrown their way. “The COVID crisis tested us and we’ve come out significantly stronger. That is super exciting to see,” he says, remaining optimistic about the bank’s future.

“In the time of COVID, we launched three new products, with each of them doing better than we expected them to. Our revenues are now 30 per cent higher than they were at pre-pandemic peaks, despite the fact that there are enormous headwinds from a revenue perspective.”

Concurrent to the turbulence caused by the pandemic, Monzo’s valuation fell by 40 per cent. At the discounted rate, the bank raised around £60 million in funding in June 2020. That December a further £60 million was raised, placing its value at more than £1.2 billion, with new backers including Novator, Kaiser and TED Global. 

The onslaught of funding is said to have been raised due to the performance of the bank despite the COVID challenges. The increase in customers even during the pandemic meant investors felt confident enough in the bank to part with vast sums.

I feel very blessed to be at a company where the customer is always at the heart of what we do

Commitment to the customer

What Anil believes truly sets Monzo apart is the bank’s steadfast emphasis on the people they serve: their customers. “Coronavirus poses a difficult environment for our customers,” he says. “We had to ensure to be there for our vulnerable customers and make sure we had to be there through their time of pain.”

This commitment to customers, and the financial issues that can plague them, can be seen very clearly in Monzo’s “gambling block”. This feature, of which Anil is tremendously proud, allows users to self-exclude from gambling, in a time when this particular addiction is on the rise. Since its launch in 2018, a quarter of a million Monzo customers have enabled it. 

Not content with features on its platform, Monzo is now lobbying the government to require all UK banks to enable customers to block betting transactions. So far eight other banks currently offer some form of a gambling block or similar tools, but Monzo is urging the industry as a whole to follow suit.

What the future holds for neobanks

Anil says Monzo is seeing a steady increase in people choosing it as their primary account. Many customers get a Monzo card as a trial, later finding themselves switching to the bank permanently. 

Before the pandemic, many were reluctant to join Monzo due to the lack of physical branches, a reservation that has since been largely swept away. The digitalisation of customers’ lives increased, Anil explains, and this now applies to their financial preferences too. “During the pandemic, people worldwide experienced a truly digital life,” he says.

All in all, the future looks promising for the global chief executive. “I feel very blessed to be at a company where the customer is always at the heart of what we do,” says Anil. “We are at a stage where we are large enough to matter to all constituents and that comes with responsibility. It’s not something we take for granted.”