Cred & Monzo Doc.docx

Cred: In the existing scenario banks want a customer to default on payments so that they can charge them whole lot of fees/surcharges etc which becomes the revenue stream for bank. Cred has actually reversed the business model and they will reward the trustworthy & creditworthy users who pay on time and this will also encourage the people to follow right practice. It only allows people with 750+ score to be onboard. By mapping/tracking all the credit cards it has the following information : 1) Details of all loan accounts i.e. credit limit used, EMI, repayment behaviour, closed accounts, applied loans, brands where one shops and also what works for a user in terms of an offer. 2) Over period of time they will have their own credit rating mechanism . 3) They can also start a credit lending product to users, basis their rating in their own database. 4) It has complete info on a user’s financial behavior basis which they shall help existing banks to offer new cards to users basis their spending patterns/requirement. It can also help banks to customize their own products/offerings. 5) They can help merchants in pitching offers to the users basis their spending. 6) They can also provide financial advisory to users in the fields of investments , insurance etc. 7) In future they may launch their own co branded credit cards in association with Visa/Master/Rupay. Possitives –      

Design & User Experience. First app to reward users for timely payments Takes just about 2 minutes to download, register, verify and make payments. Focus on premium customer base with good spending capacity. Helps identify hidden charges and manage multiple cards. Don’t need to leave the app to redeem offers.

Negatives –   

Offerings are very common and not very premium. Follows similar strategy as AmEx deals. Concerns about data privacy like need for complete email access.

Monzo : Its one of the newest licensed digital banks in the UK. It has a no fee structure that eliminates physical branches. Monzo has been very transparent in promoting crowdfunding, present growth plans, seek input into fee structures, introduce new products, functionality and employees, enlist support for developing and testing new product ideas and providing financial assistance. This has helped to build customer confirdence in such a digital initiative.

Possitives :         

Account for younger customers with a spending limit and other restrictions. Enhanced bill payment information. Simplified savings i.e. rounding up transactions, set up auto transfers for defined objectives. Mass Customization Automated switch service Measuring customer satisfaction after each interaction Overdrafts and lending Money management

Negatives/Challenges :       

Customer Awareness Profitability People use it as a secondary account and don’t put much money into that. Monzo does not pays any interest on its deposit accounts. Expensive process of new customer acquisition Charging a fee for keeping an account Data sharing for advertisers.