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Industry anticipates Monzo's entry into wealth market

Industry anticipates Monzo's entry into wealth market
REUTERS/Dado Ruvic/Illustration/File Photo

Monzo is hiring for what it has dubbed an “exciting new investment and wealth business”, leading some to warn advisers not to underestimate the potential new entrant. 

The challenger bank, which has grown to around 5mn retail customers over more than 10 years, last week put a job advert out for a general manager of investments.

This said: “We are looking for a leader to build and run the most exciting new business at Monzo - investments and wealth.” The £3.3bn-valued digital bank intends to “redefine” the way people interact with investing and wealth. 

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Monzo told FTAdviser it had nothing to add at present but industry commentators are speculating on what such a market entry might look like. 

At the end of last year, Monzo bagged a $100mn funding top-up from Chinese tech group Tencent, adding to a $500mn round led by the Abu Dhabi Growth Fund.

The bank was "going into next year with big ambitions", it said at the time. 

Heather Hopkins, managing director at NextWealth, first spotted the job advert, publishing a screenshot of it in a LinkedIn post last Monday (January 24).

She told FTAdviser “there is much” retail wealth management firms can learn from Monzo's “slick digital-first [client] journey. 

“[The] more innovative models that exist and a good dose of healthy competition will lead to [a] better experience for customers and better engagement in the long run with finances,” she explained.

“Financial advisers are held back by a lack of technological innovation from providers -  particularly legacy pension providers. 

“But many advisers can do more to introduce slick client onboarding journeys. We can't blame everything on providers.”

Hopkins concluded Monzo's entrance into investing, along with Revolut and others, was “good news”.

Integrate or build?

Revolut already offers investors a stock trading account, which also includes the ability to trade in gold and cryptocurrency, whilst Monzo’s other UK rival, Starling Bank, has taken a marketplace approach.

Starling’s ‘Personal Finance Marketplace’ includes links and app integrations to providers such as wealth management app Wealthify, and pension consolidation platform Pension Bee.

Mike Barrett, consulting director at the Lang Cat, said Monzo might opt for such an approach. 

“The latter is relatively simple to deploy, but I would expect it doesn’t do much for them commercially,” he said.

“The former would require more development, and could in theory create a new revenue stream for [the] platform and/or investment management fees.”

But Barrett added: “I would question how Monzo could differentiate this to attract customers away from the large established players such as Vanguard, AJ Bell, and Hargreaves Lansdown.”

According to a Sunday Times report back in April 2019, Monzo said it was in talks with fund giants such as BlackRock, Fidelity and Vanguard about offering cheap investment accounts in a plan dubbed “Hargreaves Lansdown for millennials”.