The US banking market is lucrative yet hard to crack but a digital bank, or a so-called neobank from UK, Monzo, is launching soon in the USA. For that reason, we wanted to have a look at what they have to offer and if they stand a chance among many other contenders. Here’s our short verdict:
Monzo USA is still very much in its beta state and new users can only join the waitlist without a hard date for the launch. Nevertheless, Monzo USA offers much-needed simplicity to the US market and a sense of community. Its ease of use via an all-encompassing app and no fees will lure in new US customers. It lacks more than a few features that it offers on its home market, but the future looks bright for Monzo.
What is Monzo?
Monzo is a digital bank from the UK that is headquartered in London. This year, they’re on track to surpass a respectable figure of 5 million customers. The company was founded as Mondo in 2015 and in 2017 it got its full banking license in the UK.
The company had to change its name from Mondo to Monzo in 2016 after its trademark was legally challenged. After a naming competition was held, the name Monzo was chosen.
After they’ve won the award for the Best Banking App at the British Bank Awards in 2019 (and 2020), they were ready to conquer the USA. On June 13, 2019, the company announced that it’s launching in the United States.
What is Special About Monzo?
Although Monzo is still not open to the public in the United States, it has a few things going for it once it finally goes out of “beta”. The mobile bank is offering no monthly minimums, no account charges, no overdraft fees, no Monzo to Monzo fees, and no fees at 38,000 ATMs nationwide.
Other benefits include the option to freeze your card instantly if you lose it and no need to notify them that you’re about to travel abroad.
You can join the Monzo USA waitlist here.
Monzo Pros & Cons
- Ability to freeze your card
- Instant spending notifications
- Pots to split your savings from your spending money
- No monthly minimum deposits
- No account charges
- No overdraft fees
- No Monzo to Monzo fees
- No ATM fees at over 38,000 ATMs nationwide
- No markup on the exchange rate when traveling
- FDIC insured up to $250,000
- Still in beta
- No public launch date
- No joint accounts
- No business accounts
- Fewer features than its UK counterpart
Here’s the thing, Monzo USA is still a far cry from its UK counterpart that won the best banking app award two years in a row. It’s still missing many features like joint accounts, savings accounts, and loans as the company is focused on building personal accounts first.
The company says that this is a light version of Monzo and that they’re listening to early adopters’ feedback to improve and add functionalities. If all these pros look good for you, join the waitlist, and you could be holding a hot coral (pink/orange) card in your hands soon.
Monzo and Sutton Bank Partnership
The US banking system is quite prohibitive as to who can start a bank. And although Monzo is a regulated bank in the UK, in the US they had to partner with the Ohio-based Sutton Bank. It’s the same for all neobanks in the US market. For instance, OnJuno partnered with Evolve Bank & Trust, Chime with Bancorp Bank and Stride Bank, and N26 with Axos Bank.
Sutton Bank is actually the one that holds Monzo users’ deposits and protects their money with insurance from the Federal Deposit Insurance Corporation (FDIC).
The company has had a few controversies in recent years. For instance, in 2019, they urged their 480,000 customers to change their passwords as a bug gave access to unauthorized staff. The company made it clear that there were no fraudulent activities happening as a result of this breach.
Also in 2019, Monzo customers couldn’t access their funds or transfer money for a couple of hours. Then in 2020, complaints started surfacing by customers claiming that their accounts were frozen without warning after the bank found irregularities. Monzo spokesperson says that “blocking accounts is a legal requirement” and that they have a “duty to detect and prevent financial crime.”
2020 brought more challenges in terms of the pandemic so the company had to use the UK furlough scheme and subsequently had to make around 80 employees redundant. In addition to that, there was a round of US layoffs as well and the closure of its Las Vegas-based customer support office.
Is Your Money Safe with Monzo?
After reading the above, you might be wondering if your money is safe with Monzo. Well, the fact that they are FDIC insured up to $250,000 should be enough for you. Although the company has had a few growing pains and setbacks, they seem to have a glowing future in front of them.
They recently acquired a new US CEO, Carol Nelson who was a longtime senior vice president of Bank of America and a 10-year veteran as CEO with the Cascade Bank. She has been a strategic advisor to Monzo US for more than a year before finally taking the CEO seat.
When to expect Monzo launch in the USA?
Monzo selected L.A. as its initial USA launch base where they held an unusual launch event offering “a few thousand cards” to American customers. Monzo beat both N26 and Revolut to the American market. Yet, the company blog states (as of Feb/21) that they still don’t have an exact estimate as to when they will leave the beta.
How do I Open an Account With Monzo?
To open an account with Monzo, you’ll have to be over 18 and a current full-time resident of the USA. You’ll also need a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN). You can join the Monzo USA waitlist here.