Monzo’s Spending on Customer Referral Program Jumps 40%

U.K. neobank Monzo has dramatically increased its spending on an effort to woo new customers.

The company paid out 29.5 million pounds ($39.7 million) on its “refer a friend” program in the 12 months leading to March, the Financial Times (FT) reported Tuesday (May 26), citing company filings.

That’s an increase of almost 40% over the same period one year earlier. Monzo’s marketing spending also climbed by nearly half to 143 million pounds ($192 million) within the same timeframe, the FT added.

The program awards customers between 10 to 50 pounds ($13 to $67) when they refer a friend to the bank, with Monzo giving a payment to both the referrer and referee. The FT notes that rivals such as Revolut and Chase have similar programs.

John Cronin, a financial industry analyst and founder of SeaPoint Insights, told the FT the uptick in the company’s referral spending was “staggering.”

“The referral schemes are quite an eye-opener, there’s a huge amount being paid out. They are really paying for their growth — it’s a standard tech playbook,” he said.

PYMNTS wrote earlier this year about Monzo’s decision to pull back from the U.S. market, and how it “brings the structural challenges” of neobanks crossing borders “into sharper focus.”

Research by PYMNTS Intelligence, that report said, finds that while consumers are willing to experiment with new apps, “sustaining that relationship long enough to become the primary financial provider is more difficult, particularly when core services such as lending and deposits remain tied to regulated entities.”

Additional PYMNTS Intelligence research into digital banking — conducted in partnership with Trustly — finds that customers of these financial institutions are more likely than other consumers to use alternatives to physical cards when incentives and protections are made available.

The research found that 44.6% of digital bank customers would rather use digital wallets, close to double the rate seen across the larger banking population. More than half of digital bank users (52.2%) earn less than $50,000 annually, compared to 30.8% of the broader sample.

And of 72% surveyed consumers said that pay by bank could replace debit cards if they were offered rewards and buyer protections.

“The findings suggest consumers who bank digitally are already acclimated to payment experiences that prioritize speed, embedded authentication and app-based financial management rather than physical credentials,” PYMNTS wrote.