After a massive pilot over the past 12 months, Monzo, a British “challenger” bank, officially launched its commercial bank account, which has provided early access to 2,500 commercial customers,media techCrunch reported. Monzo offers two versions of a commercial bank account for traders and small and medium-sized businesses – a free account and an advanced paid account.
The free Monzo business account, called Business Lite, has a feature set similar to That of Monzo Consumer Accounts in addition to providing bank access to Web-based applications. A paid business account is known as Business Pro and costs a monthly fee of 5 pounds.
It has many business functions, including “Tax Pots”, which allows businesses to set aside a percentage of inbound payments to prepare future tax bills (a simple but rather clever feature), integration with third-party accounting software, user accounts and in-app in-appin invoicing tools.
Late last week, TechCrunch reporter Steve O’Hear spoke with Tom Blomfield, Monzo’s co-founder and chief executive. Steve asked him why the bank decided to charge a fee from the start, and other challenger banking rivals such as Starling still offer free commercial banking (though, they received significant subsidies through state aid).
Mr Blomfield said: “There is a small fee . . . Can enable us to invest more in functionality. As a result, not all businesses need things like accounting integration, multi-user access, but construction costs are higher. So it seems fair to offer a free package for people who don’t need extra power. Then provide professional support to those who work in this job. I think 5 pounds a month is really worth it. The number of bookkeeping hours saved through tax incentives and integration with Xero will be compensated very quickly. “
Blomfield said the company, which now has 4m customers, is evolving its approach. “You think the problem is really right, and I think in 2019, especially in the first half of 2019, we’re trying to do too much in parallel and we’re too distracted and launched too early,” Blomfield said. And I don’t think we realize that we’re a national brand right now. YouGov named us as the UK’s number one brand last year. And I think we still operate a bit like a sloppy start-up rather than a mature bank. So this year we’ll be rolling out two or three things… The product level and maturity will be greatly improved at the time of release. “
Frankly, Blomfield admits that this requires a different way of working, and says the team has accepted it. “I’m really proud of this commercial product. It’s doing exceptionally well. So far, the feedback has been excellent and I’m very excited about that. “
Asked which assumptions proved to be correct and what was less obvious when Monzo spent 12 months developing its commercial bank accounts, Blomfield said the team knew that multiple user access would be a big deal, and that instant notification was also very useful for businesses. If you’re a freelancer, it’s really powerful to know that your customers just pay you. “
Web access, by contrast, became more important than the team first realized, which led Tonzo to invest heavily in the Web portal for enterprise accounts. In addition, Blomfield describes the tax as “a simple but so powerful feature”. “It’s similar to the rollup feature in your personal account,” he explains. Basically, whenever you receive a salary, you want to set aside a percentage so that you don’t have unpleasant tax problems within nine to 12 months. (From our feedback and surveys, it’s found that this is a very popular feature.”