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Monzo Bank Case Solution & Answer

Monzo Bank Case Solution

Executive Summary

The report discusses about Monzo and then performs a PESTEL and SWOT analysis of Monzo and its competitor, Revolut. These analyzes will be usedto assess the external as well as the internal environmental analysis that might affect the business in the upcoming period. As part of the PESTLE analysis and the SWOT analysis, both external and internal factors have been identified, implemented and explained. Monzo is a digital bank, which is designed exclusively for mobile devices in the UK. Many new application-based banks are introduced, which are known in the UK as  ‘challenge bank’. The company originally operated using mobile apps and prepaid debit cards, but when the licensing restrictions on UK banks were lifted in 2017; the company was able to provide checking accounts to the consumers. The company’s major strengths are:strong market performance and its growth in the UK, strong partnership with valuable & leading industries across domains, customer centric and lean business model, offerings of wide range of products and flexibility to traditional banks and significant increase in its market valuation with each  funding round series. On the other hand; the company’s major threats are: an increase in the number of customer complaints over an ineffective support for scam victim of Monzo, missing key features in the traditional banking, increased profitability concerns over the Monzo’s business model  and security concerns, whichtend to bring a significant decline in the customers’ trust over Monzo.

Introduction

The report discusses about Monzo and then performs a PESTEL and SWOT analysis of Monzo as well as its competitor, Revolut. These analyzes will be used to assess the external and internal environmental analysis that might last impacts overthe business, in the upcoming future. As part of the PESTLE analysis and the SWOT analysis; both the external as well as the internal factors have been identified, implemented and explained. Based on these analyzes; the two companies (Monzo and its competitor, Revolut) are then compared and some key points are made to prepare the report.A joint PESTEL analysis has been carried out for both the companies (Monzo and its competitor Revolut).

About Monzo Bank

Monzo is a digital bank that is designed exclusively for the mobile devices in the UK. (Monzo Bank Ltd. , 2018). The company originally operated using mobile apps and prepaid debit cards, but when the licensing restrictions over UK banks were lifted in 2017; the company was able to provide checking accounts to its consumers. Today, approximately 750,000 individuals use the company’s checking accounts, and the amount spent through Monzo has so far exceeded to £ 2bn.(Monzo Bank Ltd., 2020).

PESTEL Analysis of Monzo Bank

Political Analysis

The entire banking sector could be seriously affected by the political intervention. According to a report; the “politicization” of banks subsequent from the acquisitions tend to-pose a serious threat to its monetary condition. Political environment in the country has the potential to cause many issues,such as:stockholders refusing to join the business, which can negatively affect the credit constraints and capital accumulation. In the UK in particular, the December election results might create problems for Monzo and the entire banking segment if opposition party wins.(Monzo Bank Ltd. , 2019).

Economic Analysis

The economic loss caused by the fraud is quite high. The charge of the global economic scam in the year 2017 was £ 3.24 trillion, in global GDP. This factor has led towards the conclusion that scammight be a serious problem for both of the companies,i.e. Monzo and Revolut, and it is also an issue that both the businesses need to address.(Monzo Bank Ltd., 2017).

It is a huge economic shock wave, despite which, it shows that Brexit might actually cause very serious damage regarding the EU situation or might cause recession. Some also argue that with an unbound Brexit; the unemployment rate will increase rapidly and unemployment rate in the UK will double its current level of around 7%.

The inflation rate might also get-doubled, i.e. above 5.5%. As political unrest drags the UK’s economy down; uncertainty over Brexit has begun to exacerbate the UK’s unemployment rate. Due to the Brexit’s uncertainties; the company has set aside its hiring plans, has lost contracts and is facing delays. Ultimately, we will not be able to fully understand the real effects of Brexit until the negotiation process is completed and an agreement is made (if any).

Sociological Analysis

Sociological analysis shows that the British  society has undergone significant changes: more and more people are choosing online banking, while traditional in-store banking is shrinking. Finally, the demand for digital banks in the UK increased significantly in 2018. The survey shows that the gap between the satisfaction levels of customer and the direct banks and branches, is widening for the direct banks primarily.

A study found that the number one benefit of digital banking solutions remains the same. This benefit is convenience and that Europeans need more safety than ever before, which is best used for digital banking solutions. In addition, it is found that 67 percent people expect an increase in digital banking solutions demand in the upcoming years, and more than 50 percent Europeans think that they are considering a conversion towards the digital banking.

These types of evidences show that the viewpoint is generally good for the consumer demand from banks, such as: Monzo and Revolut. This also includes the fact that Monzo and Revolut have the potential to focus on providing convenience and security strategies, which-would be utilized to convince the customers on the benefits in digital banking.

Technological Analysis

Technology adoption in the banking sector has grown massively, and the key issues are privacy and safety that identify the key barriers to technology adoption by the industry. The issue of TSB’s online banking service, with the exception of consumers, will negatively impact the services of the digital banking. This could affect the existence of the digital banks, Monzo and Revolut should guarantee the consumers that such kinds of problems could be solved and they should describe the policies and approaches adopted to avoid them.

In addition to this, it also turned out that more than 85 percent-individual are in favor of not talking to machines in the banking transactions, while the remaining will suggest to invest in robotic technologies. This represents that banks should continue delivering traditional information.It also indicates that the two companies may not consider making any investment in the robotic banking services, in the upcoming years……………………

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