Monzo launches new in-app credit checker
Monzo continues to disrupt the banking industry as it takes on credit giants with its new in-app credit checks for customers.
Today Monzo announced that it is going to enable users to view their own credit scores, for free, within its mobile app. Much like fintech Credit Karma, the new service will give Monzo users direct access to credit scores, dispelling the myths of credit and returning control of finance to individuals. The service will also allow customers to receive insights as to why their credit score may have increased or decreased on a monthly basis. The service is due to be rolled out across Monzo’s products from late March onwards.
Incumbents like Barclays also offer this service, but at the cost of GBP£5 a month. Monzo is one of the first challenger banks to have this service integrated into its core banking app.
In a statement from Monzo, a representative from the challenger bank shared that many of its customers confessed that they do not understand how credit works.
How does the credit check work?
Monzo’s credit check combines two of the three main credit reference agencies in the UK: TransUnion and Experian. Monzo also uses both of these companies in order to advise on customer borrowing eligibility.
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John Ellmore, Director at NerdWallet.com, shared his comments with FinTech Magazine on the matter: "This news is a huge step for Monzo in further helping their customers understand their credit score. Many third-party services offer free credit score checks but there is always the caveat that the company providing the free report is offering the customer additional services or products. Monzo providing this as a free service is welcome news to UK consumers."
This news comes shortly after the announcement that Monzo has ranked as the second most popular brand in the UK, according to YouGov. Julian Tooke, Global Director of Product Integration at YouGov, remarked: "Monzo has certainly won over its customers." The challenger came in second place to Money Saving Expert.
Did you know? According to Wisebread, if the world’s credit cards were laid end-to-end, they could circle the globe 3.5 times.
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Stripe backs Step - the digital bank for teens
The Series C round raised US$100m in capital from a number of backers, including Coatue, TikTok star Charli D’Amelio, actor Jared Leto, and Will Smith’s Dreamers VC, for the enterprise.
Step provides a free FDIC-insured bank account and Visa card to teenagers. The accounts are backed by Evolve Bank and there is no subscription charge for its usage. Users don’t pay for their accounts and there are also no overdraft fees.
The mobile banking app enables parents to set controls and limits on spending and encourage responsible finances. According to data released by the company, 88% of the platform’s users say this is their first bank account.
To date, Step has seen great success in the marketplace. The company has raised more than $175m from investors and now has 1.5m users.
Stripe, which was founded by Irish brothers Patrick and John Collison, previously led Step’s $22.5m Series A round in 2019.
Step's Series B funding round also brought in $50m, and has a distinctly celeb-tinged reputation with investors including Justin Timberlake and the pop duo The Chainsmokers.
Users get access to a free, FDIC-backed bank account, a spending card and P2P payments platform to send and receive money instantly.
CJ MacDonald, chief executive of Step, said the company is aiming to improve the financial futures of the next generation. “Step is the only banking platform that enables teens to start building a positive credit history before they turn 18 and does not charge fees of any kind.
He has previously spoken about the importance of financial literacy for young people. “Money is just one of those things where I think the more educated and equipped you are early, the better decisions you can make down the road,” he told . “And you can also prevent yourself from making costly mistakes. I mean, the average American doesn't have $400 in emergency savings and pays $350 a year in banking fees. If we can help this next generation just ultimately be smarter and more educated as it pertains to money, I think we'll all be better off.”
Kyle Doherty, managing director at General Catalyst and Step board member, explained, “Gen Z is flocking to modern financial solutions that can be easily embedded within their digital lives and Step has a unique model for how to do this right.”
The news follows on from Stripe’s recent announcement that it plans to acquire TaxJar. The fintech, which builds software for online businesses that automates the reporting and filing of sales taxes, will most likely be integrated with Stripe’s billing services.
Currently, No terms have been disclosed but the Boston start-up had raised more than $60m from investors including Insight Partners.
Stripe chief financial officer Dhivya Suryadevara said of the move, “With TaxJar, we will help millions of internet businesses running on Stripe with their sales tax and make it easier for them to sell internationally.”