Digital bank Monzo may be ready to lose its ‘challenger bank’ moniker, having surpassed Nationwide Building Society as the most popular bank with customers of the government’s Current Account Switching Service.
Figures for the final three months of 2019 showed Monzo attracted a net 20,843 current account switchers, which was the most for the period, as Nationwide slipped to a net gain of 14,959 customers. This figure was fewer than the 21,000 Monzo signed up in the three months beforehand however, showing the results are more of an indictment on Nationwide than a big gain for the digital bank.
The figures also showed that 113,037 customers switched accounts last month, the most since March 2016. This could be in response to broadly rising overcharge rates or an unintended consequence of the pandemic, as people are forced to consider their financial situation and now have the time to research which bank can offer them the best rate.
Founded in 2015 by Tom Blomfield, Monzo has proved popular with customers, especially in the capital where its coral pink cards are ubiquitous amongst young city workers. The digital bank has amassed four million customers in total to date and recently announced it will plough forward with plans to expand to the United States in 2020.
Nationwide has long held the switching title since the government established the switching service in 2013, aiming to improve competition in the sector following the financial crisis. The building society has had to increase overdraft rates to 39.9% this year and recently told customers that it was slashing interest rates for its popular FlexDirect account from 5% to 2% for new customers, which may be impacting its switching numbers.
Monzo has had its troubles as a result of the pandemic too, showing that nimble businesses are not fully insulated from the fallout of the global crisis. Monzo has had to offer voluntary furlough for some staff and CEO Blomfield says he will not take a salary this year.