Digital bank says it is confident its mainly younger customers will pay for extra services
The digital bank Monzo has launched a premium account, complete with a metal payment card, as it tries to convince more customers to pay for its services.
Customers can pay £180 a year, or £15 a month for a minimum of six months, for the privilege of Monzo Premium. Its key features include travel and phone insurance, £600 of fee-free withdrawals abroad each month, a sleek white steel card and 1.5% interest on deposits up to £2,000.
The travel insurance will cover cancellation costs up to £5,000 as well as flight delays of more than four hours, which Monzo’s chief product officer, Mike Hudack, said could come in handy as UK travel restrictions change in response to the Covid crisis.
It marks a renewed push into fee-paying services for Monzo, which has 4.6 million customers and is particularly popular among millennials. In July it relaunched its paid-for Plus account, which it originally offered and then withdrew last year. It has also announced charges for customers who do not use its service for everyday banking but make cash withdrawals of more than £250 a month.
Hudack said the premium account had been in development before Covid and he was confident that customers would be willing to pay, despite the economic impact of Covid which has sent the UK unemployment rate to 4.5%.
“Everything we do needs to make money and be sustainable as a product that’s really key,” Hudack said. “You can’t get greedy, you can’t take too much, but if you build something that is really powerful that people love and they want to keep, you make money from that.”
John Cronin, a financial analyst at the stockbroker Goodbody, predicted Monzo would struggle to squeeze more money out of its users. “While customers will undoubtedly be pleased with Monzo’s latest offering, it is unlikely to address the significant challenges the company faces in the context of monetising its young customer base,” he said.
Monzo’s streamlined Plus account went on sale in July and gained 50,000 paying users – charged £5 a month – within the first four weeks. That month Monzo revealed that its annual losses had ballooned to £114m for the year to February, up from a £50m loss a year earlier.
It said the financial strain of the Covid-19 crisis had put the company’s future at risk and, along with stricter regulations meant to combat financial crime, it could result in lower customer numbers, higher costs and lower revenue.