5 min read

UK Neobank Arms Race

Sarah Kocianski

The UK’s digital-only challenger banks are currently engaged in something of an arms race to offer customers the broadest range of features and services. Hot on the heels of joint accounts, coming soon from both Monzo and Starling, came Monzo’s announcement that its customers can now use TransferWise within the bank’s app to send money abroad.

International Arms


As of today, Monzo customers will start to see International Payments as an option in their payments tab. If they already have a TransferWise account they can enter their login details within the Monzo app and are good to go. If customers don’t already have a TransferWise account, then one will be created for them. From that point, they will be able to send money from their current account in 16 different currencies, with all fees and the final amount the recipient will get displayed up front. It’s not the first digital-only bank to enable international payments, Starling has offered the service since May this year, however the latter provides the functionality under its own brand. Interestingly, Starling moved away from an initial plan to integrate TransferWise into its marketplace saying it could create a better customer experience with a different strategy. Both banks are keenly aware of the need to make all new features and services as intuitive and as easy to use as possible, and as a result have decided on deep integrations with their partners for their international payments services. What’s more interesting is that Starling’s partners remain unnamed, which prevents any dilution of the bank’s brand, but leaves customers with only the bank’s customer service team to direct queries at should something go wrong.

Knowledge is Power


On the other hand, it doesn’t require some customers to create another account with a new provider, eliminating a step from the payment initiation process. Monzo’s decision to partner TransferWise meanwhile, has the advantage that most of its customers already know and trust the brand, easing any concerns that may arise around using a new service. Additionally many Monzo customers will likely also already have TransferWise accounts, negating the impact of the extra step. That said, the differences in how the services are provided and the slightly different user journeys will probably have little long-term impact on the banks’ growth. In many cases existing customers are already fiercely loyal to their chosen brand, and international payments services are unlikely to alter that. That’s especially true because the difference in monetary terms to customers between Starling and Monzo/TransferWise’s offerings will likely be negligible. According to Starling’s website, customers that use its service will save around 40p per transaction versus using TransferWise. Additionally, any increase in engagement with the brand will likely be slight given how rarely customers are likely to use the feature...

Final Thought


To me, the service is nice to have but its launch is more interesting in that it gives us insight into the banks long-term strategies to achieve success. By success, I mean getting a significant number of customers conducting the majority of their financial services activities through them. Monzo continues down its path of becoming a financial hub for retail customers, which it’s happy to do with partners of similar standing and which have services that are already widely used. Starling meanwhile is looking towards a broader range of products such as small business banking and merchant acquiring. Having an own-brand services means you can have multiple different providers under the hood to serve a wider range of demographics without confusing customers with multiple brands. One thing’s for sure, this race is not ending anytime soon. We look forward to many more features and services from both banks in the near future! To find more of Sarah’s insights into fintech, you can find her research reports on Pulse and hear her regularly on the Fintech Insiders podcast.

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 Sarah Kocianski
About the author

Sarah Kocianski

Sarah is Head of Research at 11:FS, unearthing fascinating insights on diverse subjects throughout the finance and tech industries.

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