UK Neobank Monzo Unveils Investment Tools

British digital-only bank Monzo has added an investment feature to its offerings.

Announced Tuesday (Sept. 12), the bank’s Investments feature lets customers put their money in funds overseen by BlackRock, letting users invest as little as a single British pound, according to the company website.

The program offers three funds: “Careful,” for investors who don’t want to take big risks; “Balanced,” with a medium amount of risk; and a high-risk, high-reward “Adventurous” fund.

Monzo CEO TS Anil told CNBC his company launched the feature to help British consumers who may not know much about the investing world.

“There’s many, many barriers customers have in getting started … and the aim of our product is to banish those barriers,” Anil said in an interview published Tuesday. “One of the biggest barriers is the idea that investing isn’t affordable so people can’t get started.

“Another of these is that they feel overwhelmed as they don’t have the knowledge they need to get started, so we’ve embedded the knowledge and tools to make good decisions,” he added. “Another is that it doesn’t feel personalized, so we’re offering three simple options based on individual risk preferences to ensure it’s tailored to them.”

As noted here in May, when Monzo recorded its first monthly profit, the bank is one of the few European neobanks to reach that profitability goal.

“The fact remains that the field is crowded, the profits are thin, the jockeying for mind and wallet share is intense,” PYMNTS wrote in April.

That report cites an estimate from global consultancy Simon-Kucher, showing that fewer than 5% of challenger banks are breaking even.

PYMNTS intelligence found that just 9% of consumers used FinTechs as their primary bank, while 47% expressed hesitancy about using digital-only financial services.

According to “How Consumers Use Digital Banks,” a PYMNTS and Treasury Prime collaboration, consumers see services like PayPal, Venmo and Chime as “auxiliary banking services — supplements to the services offered by their more traditional banks,” with few consumers exclusively using digital-only banks.

Setting aside those who have used PayPal and Venmo, “25% of consumers have used a neobank, digital bank or FinTech with bank-like services in the past 12 months. Just 10% of respondents said that their primary bank accounts are with digital banks,” the report said.

And while 39% of respondents said digital banks can be viable alternatives to traditional ones, the study still found that more than half of all consumers were sticking with traditional banks.