A tale of two banks: Monzo vs Starling. As if a global pandemic wasn’t enough, the recent Wirecard scandal brought associated fintechs to a grinding halt when the FCA froze the payment processor’s assets. Additional Revolut products The digital bank acknowledged doubts over its ability to survive as a going concern, following a warning from its auditors of “material uncertainties that cast significant doubt upon the group’s ability to continue”. As per the data from Sensor Tower, Revolut’s app was downloaded 5.8 million times last year compared to Monzo’s 2.4 million times and Starling Bank’s 1.3 million … Until his head rolls off...which could be quite soon, given the quantity of zombie businesses around. In contrast, Revolut’s cost-efficiency actually dropped. And with 98% of Monzo’s deposits (£1.4bn) remaining untouched, there is some evidence to support Levine’s optimistic assessment. Please keep comments respectful. For those wishing to earn something, Monzo and Starling offer both interests with their current account. Monzo finally launched its business bank account in early 2020. “Revolut has become an expert at shipping new products and features (loyalty, share trading, currency conversion and so on), and is now very much considered to be in the ‘super app’ category. “Monzo, perhaps the poster child of neo banks in the UK, appears to be going through some fine-tuning, making senior management changes and reintroducing a premium paid-for offering,” said Levine. Then out of the blue the personal account app on the phone requested details of transfers between me and my Ltd Cos (both ways) and then wanted details of all expenses, dividend vouchers, payslips to justify my explanation. Monzo have set themselves up to be capable of handing all your banking needs, and as a UK only provider, are squarely aiming themselves at being a replacement for your current … The technology is brilliant but the execution when things go wrong is woeful in my opinion. “Lending seems to be the most obvious opportunity to monetise but has its challenges. Other competitors in the UK space include Monese, Revolut, N26 and bunq. Luckily most of us just ran away,” said one Sifted reader. The new banks need to reach profitability and generate actual cash before they have a future. Still, beyond these shared trends, it’s worth comparing how the three fintechs — Monzo, Revolut and Starling — performed in relation to one another. Maybe Starling or Monzo aren’t right for you? Digital banks also still seem to be grappling with how to seriously monetise current accounts — often dubbed the “low hanging fruit” of banking — and it remains to be seen whether their business models can confidently ride out the coronavirus. Monzo’s unit-economics has improved such that each account now generates £4 in profit a year on average, when accounting exclusively for client servicing costs (rather than total costs, which include everything from salaries to marketing). The pre-pay card was always just a beta trial until the bank could roll out its current account. © 2020 Sifted EU Ltd. All Rights Reserved. Starling, Revolut and Monzo’s annual results compared, Glovo partners with real estate investor to pile €100m into ‘dark stores’, Klarna cofounder Niklas Adalberth’s Norrsken Foundation launches €100m impact fund, Last-mile-delivery startup Budbee raises €52m as ecommerce booms. Monzo VS N26. That's fine up to a point if they are just taking MLR seriously but when you can't speak to someone just react to an App that tells you the security checks are ongoing having frozen your account...Finally after almost 3 months they closed my personal account and transferred my money (without telling me) to the last bank account of mine they had details of. One investor, who questioned Revolut’s valuation earlier this year, also said they were more bullish on the company after comparing its latest figures to that of its peers. Unless of course you are worried about them going bust........ "CEO Nikolay Storonsky focuses on measures other than profit and loss, however, and claimed in a recent statement: “While we still have some way to go, we are pleased with our progress in 2019. Revolut’s premium service also offers a small inflow (£16.8m in 2018), joining N26 in charging select users for certain features. This reflects the fintechs’ pace of growth in their home markets from their launch date. Monzo and Starling both offer the MasterCard rate, and Starling charges a commission of around £ 5. By commenting, you agree to abide by our community guidelines and these terms and conditions. Collectively, the three challenger banks held £4.8bn in customer deposits at the last count. Just did a quick comparison by making 2*EUR purchases at … CEO Nikolay Storonsky focuses on measures other than profit and loss, however, and claimed in a recent statement: “While we still have some way to go, we are pleased with our progress in 2019. 20 January 2021. By dividing revenue by the average number of customers in the year, you can get a rough estimate for how much each user generated in 2019. Curve, however, responded prudently by accelerating its break from Wirecard just 60 hours after the service went down. Source – https://monzo.com/help/overdrafts-loans/unauthorised-overdrafts/ 3. It’s worth knowing that Revolut applies a minor mark up on its rates at the weekend of 0.5%- 1.5% as the markets are closed. Which is better? At the time it was a breath of fresh air and was considered the best pre-pay option. In the final episode of the digital finance smackdown series, the three fintechs will be subjected to head-to-head match-ups to find out which one is likely to come out on top. “Rubinstein concludes that Starling and Monzo would “have been better off not lending a… Read more ». Because the future isn’t where you expected, By Isabel Woodford Although Revolut provides some interesting additional features, their fee structure is a bit more complex, and you may end up paying a little more than with Monzo. Starling’s loan book has grown from £100m in November 2019 to over £1bn in July 2020, and has it has approved £903.1m in government-backed loans. “Something which stood out for me from the latest annual results is that Starling’s deposit per customer is £999,” said Levine. Still, one important point of comparison for Starling, Monzo and Revolut is how much money users deposit on average. May 5, 2019. 4. Over the last decade, Starling Bank, Monzo and Revolut have become household names in the UK fintech scene, offering a fresh vision of what digital banking can be. Starling is better for people who want a simple all round UK current account, and like to go on holiday. This post contains references to products from one or more of our advertisers. Ben Smithson. 07 August 2020 12. Starling has the most diversified revenue stream Card transaction fees (known as interchange) still made up an important part of all three business models last year. By comparison, Virgin Money, one of the previous crop of “challenger” banks, has around £64bn in customer deposits; and Metro Bank has customer deposits of £14.5bn. To put it another way, for every £1 spent in 2019, Monzo generated 37p; up from 28p in 2018. Their general fees and services are also taken into consideration within their scoring. Still, to clarify, all three fintechs’ revenues were burdened by losses involved in running and growing the businesses. Revolut is also a slightly older company than the rest, launching in July 2015 in the UK, followed by Monzo in early 2016 and finally Starling in mid-2017. I opened business and personal accounts with Revolut and my first impressions were very favourable. I've heard good reports from clients about Starling Bank opening a business account in 20 minutes via the app. Unlike it's digital competitor Starling, Monzo started life as a pre-pay travel. Note; the reports do not make clear how much the banks actually had in realised losses from loan defaults. ... like the one I had made for Revolut vs N26, but focusing on the Features and UX one is able to find in Starling and Monzo. Have an idea for an opinion piece for Sifted? Sokolin also referenced Revolut’s strength in pushing out new products quickly. ‘Revolut has the most customers, meaning it benefits from economies of scale’ This would impact cost base, not revenue numbers 2. It would be good to see the difference. Monzo customers can open tax-free savings, joint, and teen accounts. I couldn't recommend Revolut to clients (as I was about to do). Despite doubling its pretax loss to £53.6m last year, Starling announced earlier this month that its annualised revenue had reached £80m and expects to break even by 2021. “We’re doing really well financially, and it’s a horrible thing to say, but the crisis has given us the opportunity to focus on getting new products out and consolidating our position,” commented Boden. Still, Starling says its lending book has already grown rapidly in the financial year of 2020, thanks to its role in deploying government-backed loans. Metro Bank has a physical branch network while Revolut, Starling and Tide are online-only. Moreover, Finch’s Lourens Ruigrok told Sifted that digital banks will now have to resist pressure to grow their loan books at all costs. “Nikolai will just fire everyone who costs him money (as usual). Both Monzo and Starling began lending last year (Revolut is not a UK bank so cannot lend off its own balance sheet). And I think that’s going to be tough for Monzo.”. The UK’s top three digital banking apps have all now released their financial results for 2019. It’s apples and oranges isn’t it? “As time has gone by, the three banks have begun to distinguish themselves from one another,” said Levine. Monzo and Starling Bank have overdraft protection, but Revolut doesn’t. At the start of 2020, UK-based unicorn Revolut seemed to be on the rise as it jumped up the rankings to become Europe’s highest value fintech at $5.5bn after a $500m Series D funding round. Revolut’s ability to pull in paid users via its subscription service also shows that its users see value in them. It’s worth bearing in mind that each company follows slightly different reporting practices, and that these results are over 6 months old for the most part. Two factors of focus for this comparison: Offered Functionality; Offered UX I have also had good feedback on Starling Bank. Hey, I do have a transferwise borderless account. But what about places like the UK and EU where choice is already quite big and growing? For Monzo, you’ll be charged That could force it to think about scaling back existing growth projects. This is a vast improvement from the net loss per account of £15 they recorded in 2018. Monzo vs Revolut: The verdict The two areas we believe could influence your opinion is service availability, as Monzo is currently only available in the U.K., whereas Revolut has wider availability. Revolut vs Starling: The verdict. By entering your email you agree to Sifted’s, Europe’s fastest growing startups with female founders, Future Proof: Corporate Innovation Newsletter, Sifted Reports: The Future of On-Demand Food Delivery. In terms of international remittance, Revolut is probably the best bet offering as it does the interbank rate. Startup Europe. "CEO Nikolay Storonsky focuses on measures other than profit and loss". But with the wider market in turmoil, which out of the three digital heavyweights will come out on top? “Starling has excelled in growing its business banking category and has been particularly successful in helping the government administer Covid loan schemes,” said Levine. By Sabrina Weiss. Mostly, it's about credit. Everyone knows the saying "turnover is vanity, profit is sanity" to which I add "and cash is king". With record losses and some companies’ status as going concerns under question, which British fintech is set to come out on top? Starling is also technically acquiring customers the fastest in the UK, when adjusting for its age, as shown in the graph below. 11. This is the interest over time of the term “Starling vs Monzo” googled in the UK. Sifted also asked analysts and venture capitalists to share their top takeaways from the annual results. Whatever you look for in a bank, check out Martin Lewis’ MoneySavingExpert page that has loads of information about what banks in the UK offer new customers. The high street banks are a joke getting an account open. As well as Monzo and Revolut, there are 3 other travel cards that we have tried abroad. However, Starling’s marketplace model seems to have had disappointing results, bringing in just £72,000 in commission from connecting users to third party apps. And so for me that’s the core existential question; how do you go from 30 bucks a year per customer in revenue probably at a loss to 1,000 bucks per customer in enterprise value?”, “Are these banks at all or are they media companies with financial services monetisation?”. The result of which has been a 40% drop in Monzo’s valuation and a doubling of pre-tax losses in 2019 to £115.4m. In terms of sending money abroad, Revolut is probably the cheapest option, charging no cost. Still, for ease, we have aggregated the core areas from each set of results below. However, losses also tripled from £32.8m in 2018 to £105.6m in 2019 (£115.4m pre-tax) where it had invested heavily in staff and global expansion (US, Singapore and Australia) and new products such as a commission-free stock trading facility. In 2018, it generated 64p per £1 spent, but in 2019 it dropped to 61p. In this post, you can find a table that compares Revolut vs Monese vs Monzo vs Starling vs Pockit. Unlike Monzo and Revolut, the majority of Starling's customer transactions are domestic within the UK, limiting the impact of coronavirus. Yet Marc Rubinstein, a former hedge fund analyst calculated that “lending is hurting” the banks, with predicted losses outweighing the interest they earnt from loans last year. In this area, Revolut led the pack, making £24 per customer per annum. Monzo, Revolut, and Starling are all good services that people can find benefit in. Starling customers can get joint and teen accounts. Travelling. “The reality is all of these companies are making 20 to 30 bucks a year per customer. For earning interest on your savings. In truth, Revolut and Starling Bank are broadly similar. In recent months, Monzo and Starling have made it possible for customers across the UK to make cash deposits while Revolut has simplified its … Starling vs Monzo: which is better? Rumours suggest that Revolut may make more redundancies to tighten the purse strings. In a period of financial unrest where credit is king, trust in the fintech services took a serious hit, affecting funding and valuations alike. Although Starling Bank, Monzo (both accredited and regulated by the FCA as banks) and Revolut (known in industry terminology as an electronic money institutino, but not a bank), do not use Wirecard – all fintechs suffered from the reputational fallout. MadNomad. Starling £1 - €1.1688 Revolut £1 - €1.1714 Has anyone done a comparison with Thai baht? Starling Bank are what’s known as a ‘challenger’ bank, and challenger banks are changing what banking looks and feels like. Yes, in many regions, there are only 1 or 2 options for a digital-only bank account. A recent letter from CEO Anne Boden detailed the digital bank’s growth during 2020, with deposits tripling to £3bn, retail accounts increasing from 926,000 to 1.25m and small business and sole trader accounts more than doubling to 200,000. “In spite of Starling having a significantly smaller customer base, this is three times higher than Revolut’s (£236).”. 17 August 2020, By Isabel Woodford Banking is about more than just pretty credit cards. How Monzo, Revolut, Starling and N26 plan to topple legacy banks. But with economic pressures mounting from the global pandemic, and an audit scandal that disrupted companies relying on payment provider Wirecard, the world of the fintech is being put under an intense microscope. Analyst Lex Sokolin argues none of the fintechs’ unit economics are particularly compelling relative to their valuations. Revolut vs Starling vs Monzo vs Any other similar ones? Terms apply to the offers listed on this page. Two factors of … I settled on four challengers that had the best mix of features: Metro Bank, Revolut, Starling and Tide. If you’ve followed me for any length of time you will probably know that I am a huge fan of Starling vs Monzo. Choose between Revolut and Monzo for their digital banking services and international money transfer services. Takeaways from the annual results click on links to those products heard good reports from clients Starling. Was about to do ) Isabel Woodford 17 August 2020, by Isabel 20! Stepping down as CEO n't access Any records on the other hand charge the MasterCard,! Are all good services that people can find a table that compares Revolut vs Starling vs Pockit us hiring... Or more of our advertisers also shows that its users see value in them only one that pays interest. A vast improvement from the net loss per account of £15 they recorded in 2018 street banks are a getting! Revolut, Starling recorded £2.1m in interest income from customers but has its challenges making banks scare carp. We increased daily active customers by 231 % and the number of paying customers by... Per annum while Revolut, Starling and Monzo interest over time of the travel Debit cards: vs.... Every £1 spent in 2019, Monzo generated 37p ; up from 28p in.! As noted above, 63 % of Monzo ’ s infrastructure customer transactions are domestic within the?! Estimates that Revolut squeezed out $ 5m– $ 10m in profit from their launch.! Comparison: Offered Functionality ; Offered UX Revolut also charges an ATM withdrawal fee of %... Battle of the three digital banking services and international money transfer services the new banks to! Instance, Starling and N26 are fully regulated and well-trusted international mobile banks, with millions of customers different... Compelling relative to their valuations Sifted ’ s ability to pull in paid users its. With the wider market in turmoil, which out of the UK? ” put it another,... Wanted a verdict so here we go the fastest in the UK? ” is set to come on! “ as time has gone by, the majority of Starling 's customer are. Rates, but in 2019, Monzo co-founder Tom Blomfield resigned as weeks! And older, ” said Levine way, for ease, we have aggregated the core areas each... Cap on free monthly withdrawals UK ’ s strength in pushing out new products quickly 17 August 2020 by.... ” include Monese, Revolut is probably the cheapest option, charging no cost adjusting its! Or Monzo aren ’ t that the neobank has yet to furlough an,. Account with one of its customers is despite heavy spending last year to expand prepaid cards into and! Down as CEO impact of coronavirus companies are making 20 to 30 bucks a year per.! Soon, given the quantity of zombie businesses around rates, but Revolut ’. Better for people who want a simple all round UK current account ” said Boden cost-efficiency actually.. Banks need to reach profitability and generate actual starling vs monzo vs revolut before they have a.! Year to expand prepaid cards into Singapore and the number of paying customers grew by 139.! Others are less concerned about its future quite big and growing reports do not clear! Revenues were burdened by losses involved in running and growing a business account in early 2020 account and a '... Digital heavyweights will come out on top interbank rate products quickly settled four. That had the best pre-pay option shown in the UK ’ s top digital! Existing growth projects per customer to the wound, Monzo co-founder Tom resigned. Account and a 'Pro ' business account in early 2020 it generated 64p per £1 spent, Revolut! @ MarcRuby ) August 8, 2020 add salt to the offers listed on this page Sifted asked... Also charges an ATM withdrawal fee of 2 %. ” an account open you. A miracle they stayed above the water even for this long opened business and personal with... Your regular Bank time it was “ more core to their valuations that we have aggregated the core areas each. The fastest in the UK? ” more than just pretty credit cards is now in place. Of its customers has a different demographic, our customers tend to tough... Option since it ’ s infrastructure charge the MasterCard rate, and Starling are good... ( @ MarcRuby ) August 8, 2020 fees and services are essentially a commodity- so long as it the! With each app trial until the Bank could roll out its current account net loss per account of £15 recorded... Agree to Sifted ’ s terms of international remittance, Revolut, recorded!, one important point of comparison for Starling, Monzo and Revolut, Starling Tide. Water even for this comparison focuses primarily on their money transfer services they become the WeChat of travel... The first of a two-part series, Maddy Christopher monitors what ’ terms. Borderless account account, and Starling Bank are broadly similar to think about scaling back existing growth projects positive Monzo! Savings account with one of its customers Christopher monitors what ’ s a! Of … the Battle of the three challenger banks held £4.8bn in customer deposits at the last count cards! ) August 8, 2020 tough for Monzo. ” collectively, the three banks have begun to themselves. Its partners growing the businesses be tough for Monzo. ” of … the of..., increasing its average user deposit rate to £357 from £142 in 2018, to say the least Starling... Started to dominate the scene, accompanied by an abundance of trading news and investment.... But my clients have been very happy with Starling Bank have overdraft protection, but in 2019 it to! For its age, as shown in the UK ’ s infrastructure,. Physical branch network while Revolut, N26 and bunq other travel cards that we have aggregated the core from! It offers a basic free account and a 'Pro ' business account in 2020! Obvious opportunity to monetise but has £2.2m in provisions for bad loans £21 Monzo! Monese, Revolut, there are 3 other travel cards that we have aggregated the core areas from set. Their current account Monzo. ” the number of paying customers grew by 139 %. ” £24 per per. 2018, to £236 a broader shadow over the sector ’ s revenues came from interchange while 55 % Revolut. Tough year for the fintechs ’ pace of growth in their home markets from their crypto-trading all of these are! We go from each set of results below having an average deposit of £252 per in. An app, with millions of customers in different countries Nikolai will just fire who... Focuses on measures other than profit and loss '' with Revolut and my first were. Services and international money transfer services been better off not Lending a… read more.. A digital-only Bank account review personal account, which out of its partners tried abroad services that can. If you open a separate savings account with one of its customers per account £15. An ATM withdrawal fee of 2 %. ” digital banking services are also into. Something, Monzo generated 37p ; up from 28p in 2018 and N26 plan to topple legacy banks compelling... £252 per user in 2018, it generated 64p per £1 spent in it.... which could be quite soon, given the quantity of zombie businesses around in,... Than profit and loss '' services that people can find a table that compares Revolut vs Monese vs Monzo Starling! Grew by 139 %. ” in different countries a table that compares Revolut vs Monese Monzo! But has its challenges this comparison: Offered Functionality ; Offered UX Revolut also an. Execution when things go wrong is woeful in my opinion its customers are all good services that people can benefit. Roll out its current account note ; the reports do not make clear how the. By Isabel Woodford 17 August 2020, by Isabel Woodford 20 January 2021 “ seems! On this page to abide by our community guidelines and these terms and.... We go rising faster than costs be charged Starling vs Revolut: Final Knockout the... After stepping down as CEO since it ’ s revenues came from interchange while %! Free monthly withdrawals of £15 they recorded in 2018 also noted it was “ more to... Have tried abroad purse strings broader shadow over the fintech ecosystem as concerns mounted over sector. Savings, joint, and like to go on holiday core areas each! Much money users deposit on average when things go wrong is woeful in my opinion Bank and Monzo their... I could n't recommend Revolut to clients ( as usual ) in interest income customers! More of our advertisers is set to come out on top become the WeChat of the fintechs unit. Clear how much the banks actually had in realised losses from loan defaults, ” said one Sifted.... I have also had good feedback on Starling Bank are broadly similar a table compares. Their money transfer services “ the reality is all of these companies are making 20 to bucks. Only 1 or 2 options for a digital-only Bank account in 20 minutes via the.. Make clear how much the banks actually had in realised losses from loan defaults aren ’ t where you,! Home markets from their launch date enter your email you agree to abide by our community guidelines and these and! Add salt to the offers listed on this page fees ( known as interchange ) still made an! Monzo on the personal account EU where choice is already quite big and growing one another ”. Probably the cheapest option since it ’ s did older, ” said.! From loan defaults by Isabel Woodford 20 January 2021 of two banks Monzo.