Challenger bank Monzo today said it is opening a waiting list for business accounts – and is accepting the first 100 applicants for beta testing.
The digital-only bank, said the addition of business accounts was one of the most popular requests from its one million+ users.
“We’re starting with a small test so that we can really understand how account features and our internal processes need to change before we can launch more broadly. We will work closely with our initial users to understand what problems we can actually solve, what works well, and what doesn’t work so well” Monzo said.
Pace of Monzo Business Account Development Dependent on Funding
The pace at which it can develop and roll-out Monzo business accounts depends in part on whether it can secure additional funding, it admitted.
To help it develop its business account offering, cloud-native Monzo – which runs more than 400 core-banking microservices on AWS – is hoping to tap a £700 million pot called the Alternative Remedies Package.
This was set aside by the Royal Bank of Scotland (RBS) after the 2008 financial crisis – and RBS’s subsequent £45 billion bailout by the British taxpayer to help speed up the process. One of RBS’s bailout conditions was reducing its market share in the SME business account sector. Banks and fintechs can apply for some of the money, and use it to build or expand their own products for SMEs.
The Alternative Remedies Package is made up of two funds:
- The Capability and Innovation Fund: Banks and fintechs can apply for a share of this fund to develop or improve their SME business banking products
- The Incentivised Switching Scheme: Banks can use this funding to incentivise RBS’ existing SME customers to switch away from RBS!
Monzo has already won approval for the latter, but said it is still working on its Capability and Innovation Fund application. If it does not secure funding, it will continue to develop business accounts, but the process may take longer, it said.
As the bank’s Jordan Shwide said in November last year: “If we win [Alternative Remedies Package funding], we’ll use the money from the Capability and Innovation fund to hire new people, who’ll be able to research, design, build, test, launch and market business banking accounts.”
In a blog this morning, he updated readers on the bank’s plans: “Our feedback made it clear that business banking is broken. Your existing business account isn’t meeting your needs. You find it nearly impossible to open an account and way too difficult to understand all the different fees you pay… You use so much software, so many different tools and systems that it’s hard to keep up. The list goes on and on, but after speaking to over 200 of you, one thing is clear: your business is unique, and so are your needs.”
“We’re excited to announce that we’re launching a small test of business accounts to 100 sole traders and limited companies! We hope we can open business accounts for even more businesses by the end of the year.”
He added: “By building and testing an early version of our idea, we can plan for which features to update and which ones to prioritise next. We will be able to build out a team to support business accounts, and get one step closer toward our mission of making money work for everyone.”