UK startup bank Monzo has launched its second paid-for account in three months, as the startup seeks new ways to make money and stem losses.
Monzo on Tuesday announced the launch of its new “Premium” service — a £15-a-month account that carries a range of benefits, such as travel and phone insurance, and offers a solid steel card.
“For £15 a month you’re getting travel insurance, phone insurance, you can see all of your other accounts within Monzo, you get the metal card, really powerful budgeting tools, a push notification every month with your credit score, offers, cash deposits, interest on your balance, virtual cards and a higher fee-free cash withdrawal overseas,” Mike Hudack, Monzo’s chief product officer, told Yahoo Finance UK.
READ MORE: Monzo re-launches £5-a-month 'Plus' account
The launch of Monzo Premium comes just months after the launch of Monzo Plus, the app-only bank’s first fee charging account for consumers.
Monzo Plus costs £5 a month and offers a more limited range of features when compared with Premium. Hudack said Plus had performed “phenomenally well,” with 50,000 sign-ups in the first month. He declined to share up-to-date customer numbers.
Hudack said it was “the right time for us and the right time for our customers” to launch Premium, despite coming so soon after the launch of Plus.
“It’s very common in the market to have good, better, best,” Hudack said. “This three tier offering, there’s a good pattern.”
WATCH: How COVID-19 is fueling contactless payment companies
Monzo had been working on the Premium account for almost two years, he added.
In July, Monzo said it faced a “pivotal” year with “significant risk” to the business due to the COVID-19 pandemic. The company has been forced to furlough and layoff staff, and suffered a large write down in its value. Monzo founder Tom Blomfield said the business was now focused on “becoming a sustainable company that’s here for the long haul.”
Plus and Premium are Monzo’s first paid-for accounts, part of a ramping up of efforts to try and generate revenue and hit profitability. The company lost £113.8m ($146.9m) on net income of £35m last year.
“Our focus is on building things that people love that are sustainable,” Hudack said. “Obviously we want to build a business that lasts for centuries, that is also incredibly important to me.”
Hudack said metal cards and insurance were among the most requested features by Monzo’s customers. Rival Revolut introduced metal cards in 2018 and they have proved very popular among customers.
Monzo was founded in 2015 as one of the UK’s first app-only banks. Today, the company has 4.7m UK customers. The business was last valued at £1.2bn.
Earlier this year founder Blomfield stepped back from his role as chief executive to take the position of president. TS Anil, a financial services veteran who was heading up Monzo’s US expansion, took over as chief executive of the entire business. Anil worked at Citi, Capital One, Standard Chartered, and Visa before joining Monzo.
WATCH: What are negative interest rates?