“People are going full Monzo,” said the bank’s founding API engineer, Simon Vans-Colina on the sidelines of Fin42, reacting to the statement that Monzo lacked the edge to become a primary account.
“There’s a handy button in the Monzo app that lets you close your old account and bring everything over.”
But only 25% of Monzo’s one million customers have made the permanent Open Banking switch, suggesting it is a work in progress.
And industry reports suggest that consumers aren't quite ready for Open Banking. The 2018 Unisys Security Index found that less than a third of consumers had heard of Open Banking, with over 75% concerned over the third party security of their data. A YouGov poll further found that 77% were concerned over data sharing, while the survey reported that 72% had not heard of Open Banking. Of those who had, only 45% understand the benefit of Open Banking. Perhaps most telling of all, 63% were satisfied with their existing banking services.
While consumers are reluctant to switch and share data using Open Banking channels, B2B API connectivity is growing in importance, according to Meniga, the Icelandic fintech specialising in improving digital banking engagement available via a REST API.
“We’ve had API Open Banking in Iceland for Meniga for nine years now,” said VP of product at Meniga, Finnur Magnusson, “we have 90% of Iceland’s banking customers through partnerships with the three main banks. We’ve been aggregating data and we’ve been learning from the data aggregation, data clean up and data enrichment here.”
And Icelandic innovation, the online game Eve Online, is indirectly connected to the foundations of Monzo’s infrastructure, according to Vans-Colina.
“I found it frustrating that I could access an online bank in the Eve Online game far easier than my traditional bank,” said Vans-Colina.
“Monzo is unlike other banks in that we don’t have a core banking system with an API bolted on top, Monzo actually IS an API,” said Vans-Colina.
“Other banks operate on batch processing of files received from Mastercard and Visa,” said Vans-Colina, “but we didn’t build Monzo that way. Monzo is made up of microservices, tiny programmes that speak the http protocol. They’re constantly talking to each other and that’s how the bank works.”
With 40-50 companies currently permissioned to use Monzo’s Account Initiation Service Provider (AISP) API, 20 are already connected. It is the start of a Monzo ecosystem, but Vans-Colina was keen to compliment fellow challenger’s work around APIs and how it informs their own strategy.
“In many ways, I’d say Starling are ahead of us in terms of API development. We’re still looking at our marketplace strategy which is evolving slowly over time,” he said. “You can firstly think of a marketplace as a place in your app that you can connect to automatically - that is the root Starling has gone. It’s light touch because they onboard people into their environment.
“We looked at that approach but decided the onboarding was too slow and we weren’t happy with the product experience. Customers expect to sign up with one tap and the service to live in their app. We’ve instead launched two marketplace apps, one which is fully integrated with TransferWise and the other is a savings account with Investec; rather than a marketplace area in-app, it’s a deeper integration,” said Vans-Colina.