How Monzo’s ‘radical transparency’ approach is disrupting banking

Disruptor bank Monzo doesn’t care about traditional media, marketing or banks. The challenger says it cares only about consumers and it’s a focus that seems to be working: the bank now has more than 1.2 million users since it was founded in 2015.

Monzo recently toppled First Direct from its near decade-long reign as Britain’s best bank for customer service, according to a Which? annual survey. And it has just raised £20m in just three hours in a crowdfunding campaign it will use to fund research, development and marketing.

Yet that growth has not come without difficulties. Despite nearly 336,000 customers taking part in the crowdfunding, its decision to allow customers to go overdrawn to take part has been widely criticised, according a to report by The Times.

Companies are banned by the Financial Conduct Authority from granting loans to customers to buy shares but overdrafts are not covered by the rules.

However, when customers are risking losses, is the bank doing enough to educate their often young and inexperienced consumers about investment? Thomas says the company always tries to be upfront, although admits its mentality of “fixing things and moving on” might need rethinking.

Speaking to Marketing Week at Madfest London last week, the bank’s head of marketing, Tristan Thomas, says: “It’s really difficult when things go wrong because even internally our natural tendency is to say, ‘let’s not tell anyone and just fix it and move on’, because you know making a big song and dance about it will make it bigger whether it’s in the media or with customers and will mean more people know about it.

“Every time we have this internal battle, and every time we share the mistakes and the problems that we’ve faced the feedback we get is incredibly positive. We have to try to build that into the future when we do make mistakes. Sharing those and how we’re going to fix it is how to help customers trust you.”

Crowdfunding is a crucial part of its marketing strategy: “For us [the crowdfunding] is all about customer engagement and letting them be a part of it so we don’t open it up [to people who aren’t customers].”

Building a business on ‘radical transparency’

In the rest of the business, it adopts a “radical transparency approach”. That means it makes every email sent between colleagues and to customers (although some private conversations and anything containing customer data isn’t share) available to anyone in the business so they can see what the company is working on and spot any mistakes. It also sends every customer a copy of it’s earnings report.

Thomas explains: “Radical transparency is about two things for us: changing the way that businesses normally interact with customers and also just building the business we want to build.”

This is us going from a company that just uses word-of-mouth to one that also uses traditional marketing to supercharge that.

Tristan Thomas, Monzo

He adds: “It’s really important we have this radical transparency inside the company so employees at every level know what’s going on. They can see the mistakes we make and the success we have and use that as their own building blocks for the future.”

That transparency extends to the product. Customers can set monthly budgets for items such as grocery or shopping, while transactions can be seen immediately on its app and notifications set up so customers can keep track of their spending.

Expanding marketing

Not only is Monzo adding more than 100,000 customers a month, it is also growing rapidly internally. It has 550 employees now but that will likely double next year.

In one year the marketing team has tripled from just four staff at the start of 2018 to 12. As the team grows, Thomas say marketing will go from one core team to multiple different teams.

Some 80% of Monzo’s marketing is focused on growth through word-of-mouth, with the brand focusing on community meet-ups and hackathons to spread the world. But as the brand grows it is starting to adopt a more traditional marketing approach.

Thomas explains: “All of those activities bring people close to the brand and we’re still doing that but we’re also looking into traditional marketing as well. We’ve been running Tube ads in the last couple of weeks and ads on Facebook and Google.

“This is us going from a company that just uses word-of-mouth to one that also uses traditional marketing to supercharge that,” he explains.

Thomas joined Monzo not long after the brand launched as community manager before going on to take roles as product manager and interim head of marketing before taking on his current role. While he hasn’t worked in either banking or marketing for long, he is at times scathing about both, questioning the budgets some of the big brands have for marketing.

He says: “I am not a trained marketer and before I started at Monzo I was very sceptical of marketing in general because so much of it is spending money and budget for the sake of it. It seems to be about getting status and success because you spent budget or you ran a really innovative campaign but never connecting it to the results at the end.

“The most important thing is being able to say that these activities we ran, whether they were £10 or £1m, this is the impact they had in a really measurable way.”

One area where Thomas has changed his mind about marketing is in the use of agencies. Up until now, it has done almost everything in-house but is beginning to look for external help.

Thomas says: “We’ve been on a journey where two years ago we would say we’d never use agencies and now we’re just starting to. In the long-term it will probably be a combination. In general we’d prefer to do everything in-house but I can really see the benefits for agencies providing specialist support.”

The future of banking

Monzo’s aim is to be more than just a bank or a “butler in the background” and to change the way people think about their money.

Thomas explains: “It’s going to take away the stress of money. When you think about the way people interact with their money it’s often sitting down at the end of the month and putting a cold towel over their head and saying ‘I don’t want to look at my bank account’.

“We want to flip that on its head so Monzo works for them. [For example it could] help to tell them when they’re spending too much on their energy and helps them switch provider so they tap one button and switch.”

Monzo also sees innovation as key and releases new features nearly every week. However, Thomas argues the key is to integrate innovation throughout the business.

Thomas explains: “Innovation is such a buzz word now it’s very hard to tell what it means. You see this a lot with big banks where they have whole innovation teams and chief innovation officers and that kind of misses the point, like when companies have a digital team as if the rest of the company is analogue. Digital and innovation should just be key part of you do and be a baseline.”

Major banks such as Lloyds are now adopting some of the features that have made Monzo so popular, such as categorising transactions and freezing cards (where users can temporarily suspend a card if it has been lost).

Does Monzo worry it’ll lose its edge? “Not really. It’s great that traditional banks are building features that challengers innovated on but the thing to remember is they are building features now that we built three years ago. They are trying to build Monzo as it is today and we’re much more concentrated on building how Monzo will look in two or three years’ time.”