According to an article by CNBC, British digital bank Monzo has ventured into the world of investments with its new feature, "Investments," allowing users to start investing with as little as £1. The bank, valued at $4.5 billion, has partnered with BlackRock to offer a range of funds. This move is part of Monzo's strategy to expand its financial services offerings and diversify revenue streams as it aims to achieve full-year profitability.
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Monzo's Investments feature will compete with established banks like Chase, which offers online investment management through its subsidiary Nutmeg, as well as with younger startup competitors such as Chip, Moneybox, and Plum. While Monzo already offers interest-yielding savings pots, this marks its first entry into the investment market.
The application process is user-friendly, starting with customers joining a waitlist to access the product. Eligible users will then create an investment pot, choose from three BlackRock-managed funds with varying risk levels: Careful, Balanced, and Adventurous.
Monzo's CEO, TS Anil, highlighted that the aim of this product is to remove barriers to investing, including the perception that it is unaffordable. According to YouGov research commissioned by Monzo, a significant percentage of the UK population is uncertain about accessible and simple-to-use investment options. Monzo aims to address this by allowing users to start investing with just £1.
The Investments feature will be housed in a new section on the Monzo app called "Savings & Investments" and will roll out to eligible customers in the coming weeks. However, Monzo will not offer the feature to customers in financial difficulty.
Monzo, which recently surpassed 8 million customers in the UK, is continuing to expand its financial services offerings and revenue sources. The bank reported its first two months of profitability in 2023, driven by higher interest rates in the UK.
Monzo will charge a flat 0.59% fee on customers' investments each month, consisting of a 0.14% fund fee and a 0.45% platform fee.
Monzo sees itself as a "financial control center" where customers can manage various aspects of their financial lives. While competitors like Revolut aim to become financial super apps, Monzo's investment offering marks it as a pioneer among licensed neobanks in the UK.
Although Monzo faces competition from fintech platforms like Revolut and Wise, who also offer investment services, the bank believes its product is well-timed to meet customers' growing interest in making long-term financial decisions.