What does quality mean for Business Design? 7 lessons from Monzo
By: Neal Bingham
Tags: Design, Strategy, Business, Fintech

From clarity of purpose to inspiring storytelling, key learnings from the self-proclaimed “bank of the future”.

At Fjord London, we’ve spent quite a bit of time discussing quality recently, and a few months ago set ourselves a challenge to define and illustrate what it means for each of our design crafts.

~We wanted to consider: What does quality in Business Design look and feel like?

Business Design at Fjord means ensuring design has impact, that it is viable and sustainable in a business context, and that humans are at the heart of the way we approach business problems. The answer to the opening question was always going to be a bit more nuanced than just “a well-designed business makes money.”

When exploring the topic within the Business Design group and looking for examples of quality, we found ourselves continuing to come back to companies that appear to have a strong human-centred philosophy, while being impactful. The one that came up most frequently was Monzo.

If you’re a young professional from the UK, or just follow tech news, chances are you’re already familiar with Monzo — the fast-growing challenger bank startup that at one stage was apparently so cool it became a chat-up line in London bars.

It’s since become a little more mainstream (and has probably lost some of its chat-up line potential), but they’ve kept hold of one of the key things that has helped propel their growth: their human-centred ethos. At the same time, they’re making an impact by becoming a major part of the challenger bank movement that has got much of the banking establishment genuinely worried.

In this post, we’ll introduce seven of the key aspects of Business Design and share our thoughts on why we believe Monzo embodies what we consider to be quality in these areas.

The key aspects are:

· Purpose and mission

· Storytelling

· Value proposition

· Ecosystem

· Business model

· Scaling

· Roadmapping

Clarity of purpose

An obvious place to start is with Monzo’s purpose and mission.

As Business Designers, our work often involves relating how design is impacting the organisation’s overall direction, whether that’s tracking how design efforts are contributing towards the mission, diagnosing when the direction needs to be clearer or, if we’re lucky, working with Service Designers and colleagues from other crafts to develop the ‘North Star’ vision from scratch.

There is now increasing recognition that being purpose-driven and being profit-driven are not mutually exclusive; on the contrary, purpose has been found to be directly linked to business success. This Forbes article argues how purpose-driven companies have employees that are more motivated and energised, customers that are more loyal, and business outcomes that are more positive than those of their counterparts.

In Monzo’s case, the idea of making the world a better place by giving people more control over their money is an idea that’s easy to get behind, particularly for those who’ve grown frustrated at the experience provided by the traditional high-street banks.

For example, a quick glance at the company’s reviews on Glassdoor provides a sneak peek into what it’s like to work at Monzo, and this clarity of purpose comes through in many of the testimonials from current and former employees, who rave about working on a product they believe in. As one reviewer effuses, “Everyone I’ve met believes they are building something that could change the world. After a short while, I do too.”

It has also arguably helped them to break crowd-funding records. The startup’s initial Crowdcube funding round in 2016 saw them raise £1m in just 96 seconds, making it the fastest crowdfunding raise in history at more than £10,000/second. Its more recent round in 2017 again broke records, this time for the number of investors, as it generated £2.5m from more than 6,500 backers — almost doubling Crowdcube’s previous record.

The clarity of purpose that the challenger bank has had from the outset is likely to be one of the foundations of Monzo’s success in terms of its ability to differentiate itself from the ‘banking establishment’, appeal to early adopters within its target demographic, and get people on board.

Inspiring storytelling

The ability to tell a compelling story goes hand-in-hand with having clarity of purpose. Stories help to convey one’s purpose and can inspire and motivate people in a way that engaging on a purely rational level cannot. Stories reach our hearts, as well as our heads. As such, they can be a powerful business tool to help build a lasting brand and gain trust and buy-in from customers, employees, investors and other stakeholders.

By extension, storytelling is an important part of Business Design. We’ve already mentioned how placing humans at the heart is key, and the art of storytelling has helped humans to relate to each other for more than 20,000 years — since the days when cave drawings were the dominant medium. Business Designers have been described as ‘navigators’ who can speak the language of business as well as the user, and they often bridge the gap between the two. Stories are a proven way of carrying a narrative throughout the creation and delivery of a product or service, and bringing people along on the journey.

Monzo frequently shares its story with its stakeholders through the company’s blog and regular emails, and, like many successful brands, its story is deeply tied to its CEO and co-founder Tom Blomfield. It is a story of a relentless quest to improve people’s lives by helping them to manage their money better while almost waging war on the banking establishment, which he frequently reiterates in his interviews with the press.

It’s a classic tactic of creating a ‘David and Goliath’ mentality that has helped to build a human connection with Monzo’s customers by creating a sense that Monzo is on their side, and fighting on their behalf. It’s easy to see how the business has managed to build such a strong following by offering a great customer experience built on top of this type of narrative, which has succeeded in putting a human face on an industry that has traditionally been perceived as faceless and mercenary.

CEO and co-founder Tom Blomfield. Photo: Monzo

Evolving the value proposition

Along with clarity of message, a successful business needs to be clear about the unique value it offers to its target audience and why it is different from the alternatives — in other words, the value proposition. And as Business Designers, we love getting stuck into creating new value propositions, which means we’re always on the look out for best practices.

Monzo is a great example of a company that has been very clear about the specific needs it’s addressing within its target market: the smartphone generation. What’s particularly interesting here is that, although the business has grown and evolved, the proposition at any given point has always stood up on its own and been valuable in its own right.

When it launched in 2015 without a banking licence, the unique selling point was essentially a money manager app that gave users better visibility of their spending. Yes, the functionality was limited, but it was enough to get people on board because Monzo had identified a genuine need and found a way to solve it that worked from a business perspective.

Monzo is now a fully licensed bank, and people have started switching over to it as their main bank (known as going #FullMonzo).

In the future, Monzo wants to become a hub for all parts of people’s lives that impact on their finances. The point here is that they could never have launched on day one with their planned future offering, as this takes time to build, but they’re evolving in the right way by finding a way to offer something compelling at each stage along the journey, with each proposition serving as a stepping stone to the next.

Embracing the ecosystem

Although Monzo is evolving, no business can do that effectively by operating in a vacuum. It’s increasingly critical for the business to have a holistic understanding of the ecosystem that surrounds it, and what the various roles and opportunities are within it. It has been said that the ecosystem is the new warehouse, as well as the new supply chain.

As Business Designers, we often like to map out an ecosystem as a way of identifying opportunities, to take advantage of resources that the business has access to but doesn’t necessarily own, and to find new ways of generating value through these resources.

Monzo is clearly a company that is embracing the ecosystem and acting like a platform. They built an API for their service right from the start and have held hackathons where they’ve invited developers in to come up with new ways to make the service work better for customers.

A lot of the ideas revolve around integrating with other services. A recent example is the integration with IFTTT, which lets customers set up rules to automate certain actions on their account and connect to other services.

For example, there’s one that allows account holders to automatically transfer money into a ‘fast-food punishment pot’ every time they use their card at McDonald’s, while another allows students to set up a weekly allowance to be transferred from their Student Loan pot.

Meanwhile, Monzo is trialing a Marketplace feature that will involve leveraging the ecosystem in a more fundamental way — we’ll come back to this one shortly.

Monzo’s integration with IFTTT

A business model for the digital age

Embracing the ecosystem is key to developing a strong business model in the digital age. As Sangeet Paul Choudary — author of Platform Scale– puts it, “we are in the midst of a transformative shift in business design as business models move from pipes to platforms.”

As Business Designers, we focus particularly on the viability of design, and sometimes that means identifying new revenue streams or business models, which may be different to traditional ways of doing business.

Monzo’s CEO and co-founder Tom Blomfield is adamant that the traditional banking model is broken and that if he and his team do their jobs right, they will make some of the high-street banks extinct.

On one hand, a traditional bank locks in customers from a young age by cross-selling them the bank’s own credit cards, loans, mortgages and so on, and then charges high fees for using those products. By comparison, Monzo’s approach is far more human-centred and involves building a modern customer experience that people genuinely want to use; their former head of marketing described how the company was “building a mobile experience for banking that you could compare to the way Whatsapp, Spotify or Uber feel to use.” Having established a loyal customer base, Monzo now charges fees for overdrafts, albeit at more reasonable rates than the bigger players.

Monzo is not profitable yet, but in the long-term, the plan is to make the majority of revenue by becoming a marketplace. Having access to a wealth of data on their customers will allow the bank to offer them relevant products and services from third-parties — think savings accounts, insurance energy tariffs, etc.— then charge those companies a commission.

They’re still testing the marketplace concept, but it could turn out to be a model that’s more sustainable in the digital age, and it highlights just one way in which a business’s ecosystem can be harnessed in order to rethink its revenue model.

Dealing with growing pains

There comes a time in a successful business’s life when it needs to grow up and make its way in the big wide world — it needs to scale-up.

Scale puts pressure on a business, and the customer experience, infrastructure, culture, operating model and business model can all begin to feel strained. As Business Designers, we’re often involved in the process of helping businesses achieve scale without losing the essence of what makes them successful.

The team at Monzo have hit a few bumps along the way as they’ve had to scale. Perhaps the most well-known is the change they made in 2017 to the cost of withdrawing cash when outside of the UK. From launch, the bank offered unlimited free overseas ATM withdrawals, absorbing the 1–2% fees that are payable to the ATM owner themselves. However, this became unsustainable as their customer base grew, with the ATM cost per customer more than doubling over the course of a year.

Their solution was in line with one of their core principles, which is “Transparency by default” — they blogged about the challenge these rising costs posed to the sustainability of the business, and proposed three pricing options from which the community was allowed to choose by way of a vote.

By being open about their decision-making process and ‘co-creating’ the solution by allowing their customers to have their say, they have managed to achieve a compromise in their service that has enabled them to ensure they can cover their costs without hindering their growth.

Plotting the right course

Finally, a key tool as a business scales is the roadmap that guides the organisation towards their vision.

Business Designers are often the map makers on design projects, working out where to go next from a business perspective, as well as how and why. Doing so inevitably means making trade-offs, which is where we find ourselves frequently calling on one of our favourite guilty pleasures, the Prioritisation Framework. It’s a model that helps a business to consider the desirability, feasibility and viability of ideas in order to build a roadmap of which ones should be built and in what order.

Monzo goes one step further, however, and has made its roadmap transparent, opening up what the company is working on now and next and inviting feedback from the community. Another example of their principle of transparency, this roadmap used to be in the form of an open Trello board, and has recently moved to a ‘Making Monzo’ area on their own site.

When the roadmap lived on Trello, customers were able to vote for their favourite feature ideas directly on the Trello board, allowing Monzo to get real-time feedback on which ideas would prove the most popular with customers. The team was very open about the fact that these votes were a factor when deciding what to work on next (the ‘desirability’ aspect of the prioritisation framework), but that their engineering time (feasibility) and internal priorities (viability) would generally take precedence.

The Takeaway

We’ve explored seven ways in which Monzo exhibits the hallmarks of quality in terms of the design of the business.

By aspiring to a greater purpose and focusing on people, the company has built a loyal and engaged workforce and customer base. By having a clear and evolving value proposition, they’ve identified how their offering can stand out in a changing market, and form the basis of a business model that challenges how banking traditionally works. And by involving their customers in key decisions, they are managing to achieve increasing scale in a way that is viable, while avoiding alienating their existing customers.

Achieving quality in these areas is a proven way of maximising a business’s chance of success on the bottom line, and while Monzo hasn’t reached profitability yet, it continues to move closer. In the meantime, they remain a great example of original Business Design thinking.

Are you a current or budding Business Designer, interested in working with some of the most talented folks in design to help create impactful businesses? Please get in touch!