Monzo is launching one free and one paid business account
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UK-based neobank Monzo announced the launch of two business bank accounts that it trialed for the last 12 months and extended early access to for 2,500 business customers, per TechCrunch. Geared toward sole traders and small- and medium-sized businesses (SMBs), the accounts mark previously consumer-focused Monzo's entrance into the business banking space.
The neobank's new businesses accounts will be offered via a tiered model:
- Business Lite is free to use, and offers both mobile and web access - the latter of which Monzo CEO Tom Blomfield told TechCrunch was a more in-demand feature than they had anticipated.
- Business Pro is a premium account which comes with a £5 ($6) monthly subscription fee. The account comes with features like "Tax Pots," which allow businesses to allocate a percentage of inbound payments in preparation for a future tax bill, integration with third-party accounting software like Xero, multi-user accounts, and in-app invoicing.
The slower pace at which the accounts have been rolled out is seemingly a departure from Monzo's previous strategy of going for quantity over quality. In the early days of its 2015 launch, the neobank was more focused on the speed with which it got products to market: "We spread ourselves too thin and launched too early," Blomfield told TechCrunch. But having tested these business accounts with actual businesses and for the course of a year, the neobank seems well-positioned for success.
Taking the time to ensure a quality offering is integral to building a sustainable business, as rushing to launch a suboptimal product could result in a costly retraction and relaunch, not to mention diminished customer trust. This happened with Monzo's premium consumer accounts, which it shuttered just five months after launching due to customer backlash, and relaunched several months later.
Expanding its product line also invites more competition for Monzo - but its multitiered approach could position it for sustainable growth. The UK SMB neobank space is highly competitive, with players like OakNorth, Tide, and Starling, the last of which has grown its SMB marketplace to 24 integrations from other providers, for example.
But Monzo's multitiered subscription model could help it gain ground in the space by appealing to the widest possible swath of prospective clients, from individual freelancers who may opt for the free account, to more established SMBs that can benefit from the more advanced integrations of the paid account. Additionally, offering a paid account can give Monzo the ability to generate consistent revenue through the subscription fee.
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