Transcript of Monito's Video Review of Monzo vs Starling Bank

Monzo & Starling: The Rivalry 

The history of Starling and Monzo is somewhat steeped in rivalry. Starling Bank was founded in 2014 by Anne Boden, shortly after, in 2015 and during a challenging year for Starling, a collective group of employees including Tom Blomfield staged a coup and attempted to take over the business. However, they were unsuccessful and left to create a bank called Mondo, which would eventually be known as Monzo. 

This departure left Starling with no employees, and a lot of debt. The bank and their founder Boden appeared to be doomed for failure, it was a make or break moment for the company. Fortunately, they survived, and have since moved on from and prospered. One thing we can be sure of though, in 2015 a rivalry between Starling and Monzo was born. 

Now before I jump into the first category, I want to clarify that if you choose to deposit with either bank, your money will be safe. Both Starling and Monzo are licensed in the UK by the FCA and are FSCS protected. This means that if either bank were to go bust, you would be reimbursed up to £85,000 and normally within seven days.

Category 1: Mobile App (Monzo)

This feels like an appropriate place to begin because for both companies, their apps are at the core of their business. Although some of the categories today will be based on certain functions within the apps, I do want to compare their design, layout and functionality.

As you would expect, both apps function really well, they’re responsive, easy to navigate and well-designed. They offer light and dark modes, Face ID to unlock, and customisable app icons. 

Starling Bank uses a more traditional design, one that could be described as simple & sophisticated, while Monzo has more colour and character. You could draw similarities with the design of their apps and the perception of their brands, but we’ll talk about that later. 

Starling does feel a little bare and minimalist to me, which to some could be a good thing. I also find the Starling app harder to navigate compared to Monzo. However, unlike Monzo, it does have its own marketplace where you can link third-party apps to your Starling app. This will give you greater benefits and includes insurance, cashback on purchases, investments, an app that consolidates your pensions and one for improving your credit score. For those that rent, and pay their lease through Starling, you can share these payments with the app CreditLadder to help enhance your score. 

While Monzo doesn’t have a marketplace, through their free and paid accounts they do offer some of the benefits the Starling marketplace can provide. That said, as this category is more geared towards design and user experience of their apps, rather than products & features, I’m going to give this one to Monzo. To me their app feels more modern and pleasant to look at and I also find it easier to navigate.

Category 2: Money Saving Features (& Earning Interest) (Monzo)

A big thing that attracts customers to both Starling and Monzo are their great money saving features. These features are a reason many people have chosen to open accounts with the banks, and both companies have played a big part in pioneering this type of digital product within the banking space. 

Monzo has a product called Saving Pots, while Starling have their Saving Spaces. Essentially they’re like having a separate balance, not quite an account but instead a place where you can set aside money from your main balance so you can save it and avoid the temptation to spend it. 

Both Monzo and Starling allow you to set a custom name for your saving balance, as well as an image. With both banks you can also set up direct debits and standing orders from your saving balances. This can be a great way to ensure you always have enough funds set aside for important payments. They also come with a round-up feature, that allows you to round-up each payment you make to the nearest pound, and deposit the difference. For example, if you jumped on the bus and your fare was, let’s say £1.90, the transaction would be rounded up to £2, and 10p deposited into your savings account.

With Starling you can reach your target faster by applying a multiplier of x1, x2, x5 and x10. Monzo also offers this through their advanced roundup feature, however that’s only available to Monzo paid accounts.

Also any money you hold in a Starling Saving Space contributes towards the interest your account earns. This means that the total amount of money you hold between both your main balance and Saving Spaces will earn an interest of .05%. 

Monzo has a number of interest products available, provided by banks such as Paragon and OakNorth and the potential interest you can earn will vary depending on the terms. For example, on a 1 year fixed term and a minimum £500 deposit, you can earn up to 1.13% AER. 

Unlike Starling though, with the Monzo free account you can’t earn interest on your main balance. However, the interest rate with Starling is fixed at .05% and Monzo has a wider selection of options and greater interest rates. 

With that in mind I’m going to give this one to Monzo. I think if you’re serious about utilising their Saving Pots, and not just looking to earn interest on your main balance then they are the better choice. They also allow you to have as many as 20 Pots, while I believe Starling is capped at 6 Saving Spaces.

Category 3: Cash & Cheque Deposits (Starling)

While both companies allow cash and cheque deposits, it’s quite clear which one is the best.

For cheques, Starling has a far better option. Through their app you can simply snap a photo and upload up to four cheques per week. As long as they’re below £500 and don’t bounce, the money should be available in your account the next working day.

With Monzo you have to post your cheque to them, which could potentially incur a cost if you want to send it recorded, although they do have a freepost option. Monzo will notify you when they start processing the cheque and it’ll take up to 3 to 4 weeks to see the money in your account. That’s not great - especially if you're like me and your Dad still gives you a cheque for your birthday….. When he doesn’t forget.

For Starling from March this year, you can deposit up to £5,000 in cash per year. Your first £1,000 is fee-free and once you exceed that amount you’ll be charged a .7% fee. 

With Monzo you can deposit money at any of the 28,000 PayPoint locations across the UK. For a fee of £1, you can deposit between 5 and £300 in one go and a maximum of £1,000 every six months.

Now, there are around 11,400 Post Office branches in the UK and that’s 16,400 less locations than PayPoint, so it’s very possible that a PayPoint location may be closer to you, so therefore Monzo will be more convenient for cash deposits.

However, with the 6 month limit of £1,000 combined with the fact that Monzo free account holders always have to pay to deposit cash, Starling is the clear winner here. They have fee-free deposits and a far greater maximum yearly deposit amount. 

I suppose if you were dead set on getting a Monzo account and cash deposits are important to you, you could open a Starling account, deposit the money into that and then send it across to your Monzo account. Although I guess that contradicts the entire point of this video as it’s meant to help you decide between one or the other. 

Category 4: Spending Overview & Analytics (Starling)

Spending analytics can be great, especially if you’re someone that’s serious about money management and both Starling and Monzo do this wonderfully.

Both banks will notify you when transactions are completed and this can include phone and watch notifications. They also have spending categories which are automated but can also be edited and applied manually. Categories can include groceries, travel, lifestyle, income, gambling, and many more, and they’re a great way to see how much you’re spending within the various areas of your life. 

With Starling you’re able to segment your payments into Categories and Merchants which can be quite a useful way to see how much you’re spending with a particular company. Monzo doesn't offer this, and besides that there isn’t a huge difference between the two. At least not when it comes to Monzo’s free accounts. 

Their Plus and Premium accounts do have some cool features. For example, you can integrate external bank accounts and credit cards with your Monzo account so you get full visibility over your finances and spending. This is a great feature but it’s not free, and that’s why we’ve gotta give this category to Starling. Although both banks are pretty good at this, Starling wins the category because they allow you to segment payments between either your various spending categories or merchants. 

Category 5: Domestic ATM Withdrawals (Starling)

If you withdraw more than £250 in 30 days within the UK, Monzo will charge a 3% fee. There’s also a daily ATM withdrawal limit of £400 and a monthly limit of £5,500. Although Monzo says depending on how you use your account you may be able to get greater allowances. This includes if you pay in at least £500 every 35 days, and have at least one active Direct Debit. 

Starling allows you to withdraw money up to six times per day and has a daily limit of £300 and never charges a fee. And unless you need that extra £100 limit per day, the fact Starling never charges a fee for withdrawals means they win this category. 

Category 6: International Spending, Sending and Withdrawals (Starling)

International transactions and ATM withdrawals are an area of banking that’s been somewhat abused over the years. Traditional banks not only charge fees for you to spend your money abroad, but they also hide fees by giving you a poor exchange rate so they can further profit from your spending.

Fortunately neither Monzo nor Starling do this and they’re both pretty great when it comes to spending money abroad. With both banks you’ll never be charged a fee for international transactions and you’ll always receive Mastercard’s exchange rates, which are more or less on par with the real, mid-market exchange rate. 

When it comes to withdrawing money abroad, Monzo can charge a fee, and depending on where you are in the world, this will vary along with the maximum amount you can withdraw. Starling on the other hand never charges you a fee, and you can withdraw up to £300 per day. 

If you want to send money internationally, both Starling and Monzo offer this. Monzo has teamed up with Wise, who have a fantastic reputation when it comes to money transfer and only ever offer the real, mid-market exchange rate and charge just a small fee per transaction. 

With Starling, you will also only ever receive the real market exchange rate which should be practically the same as Monzo and Wise. I compared them and found that if I was to send 1000 EUROS with Monzo and Starling, the prices were pretty similar, although depending on the delivery option, Starling could potentially be cheaper. 

But because there are so many factors that can influence the cost of sending money abroad I highly recommend you visit Monito.com and use our comparison engine. All you need to do is enter your transfer details, and we’ll quickly tell you who the cheapest, fastest and best provider is. It’s free, will only take a moment and is likely to save you some money.

I can’t give a clear winner for sending money internationally neither can I say who’s the best for spending internationally as both banks don’t charge fees and use Mastercard’s exchange rates. However, for ATM withdrawals Starling are the clear winner as they never charge you for withdrawing your money abroad. 

Just make sure if you withdraw money from an ATM that you choose to be billed in the local currency so you receive the best possible exchange rates. 

Category 7: Card Replacement Fees (Starling)

Remember how I mentioned earlier that depending on how you use your Monzo account you may get greater fee-free ATM withdrawal limits. Well the same thing applies to card replacement fees. Monzo says depending on how you use your account you may get replacement cards for free. For me though, I don’t have this option and it will cost me £5 to replace my card.

With Starling you always get one free replacement card per year, and after that it’s £5 per card. For that reason I have to award this category to Starling. 

Category 8: Overdraft Facilities (Starling)

With Monzo if you’re eligible you can borrow up to £1,000, and depending on your credit score, interest rates vary between 19%, 29% and 39% EAR. This is the amount of interest you’ll be charged across a year if your account remains overdrawn. 

Starling offers interest rates of 15%, 25% and 35% EAR, and has a maximum overdraft limit of £5,000. Both banks have handy overdraft calculators that allow you to get a pretty good indication of how much you might have to pay depending on the amount and the interest rate. 

Although their interest rates are relatively similar, Starling’s can be as low as 15% and with them you can borrow up to £5,000, so with that in mind Starling is the winner of this category. 

Category 9: Customer Feedback (Monzo)

For this I’m going to look at their performances on Trustpilot as well as the Google Play & Apple App stores. 

On Turstpilot, Starling is ranked 4.3 out of 5 stars and has accumulated over 26,000 reviews, of which 74% are excellent and 10% are bad. 

Monzo is ranked a 4.5 and has just over 20,000 reviews, 80% are excellent, and 11% are bad. 

On iOS Starling has over 290,000 and a 4.9, Monzo has over 85,000 and like Starling a 4.9.

The Google Play store is also very similar, Starling has over 70,000 and a 4.8 while Monzo has just over 70,000 and a 4.7.

Their ratings are practically identical, both companies have accumulated some impressively positive reviews. Although Monzo does have a slightly higher rating on Trustpilot, so I’m going to give this category to them. 

Category 10: Brand Perception & Financial Performance (Monzo)

The final category is something that I really don’t want to solely impact your decision. The financial performances of these companies and how that affects you is important, but because they’re both FSCS protected, as long as you deposit less than £85,000 your money will always be safe. 

Now there has been some skepticism recently surrounding Monzo. In their last annual report, they declared losses of over 130 million pounds and people are speculating whether they will be able to continue under such heavy losses. Although their CEO has said that this year they’re on course to becoming profitable.

Starling on the other hand are profitable, although they’ve been in business for a year longer so perhaps you could forgive Monzo for not yet getting there. And If Monzo can find profitability they could potentially perform better. 

They have over 5 million customer accounts while Starling has just over 2 million. Monzo is also heavily investing in the success of their paid accounts which now have over 200,000 customers. If they continue to grow they’ll certainly contribute to helping them become profitable.

Financial reporting aside, Monzo in my opinion has a cooler and more unique brand identity and I think this resonates in the public perception of the brand and the design of their app. Like I mentioned earlier, their app has a lot of colour and character making it feel more modern and trendy.

For me Starling has more of a traditional and minimalist feel to it, and that’s possibly testament to their success. Starling has the feel and comfort of a traditional bank while providing all the benefits of a pioneering and innovative digital bank 

That said, unlike Monzo, they aren’t as quick to adopt in-app changes and features. Monzo has garnered a great reputation for listening to their community and consistently bringing out new and useful features. 

And that’s why for this category I’m going to give it to Monzo. I don’t intend to deposit more than £85,000 so I’m not concerned by their financial results and I do love their willingness to change and listen to the feedback of their customers.

I also believe Monzo account holders can be sure their bank will always be on the cutting edge of digital banking, and as a result you can expect to see innovative and cool new features frequently popping up in your account.

Outro

In the end Starling won 6-4. When it comes to free accounts in my opinion Starling does have the better offering. Their fee-free cash deposits, ATM withdrawals both domestically and abroad as well as their 1 free card replacement along with the cheque deposit feature were the stand out differences. Spending analytics, saving features so Pots and Spaces, their overdraft facilities, customer feedback and app experience are relatively balanced, and if you don’t care about the fee-free benefits of Starling then it’s quite possible Monzo could be for you, particularly if you want to utilise their Saving Pots.

The outcome of today’s video may have also been very different if we were to compare Starling with Monzo Plus or Premium. These paid accounts do come with some really cool features that Starling does not offer and if you want to find out more about those just click here and check out the full review I made on Monzo.

Let me know in the comments section if you already bank with either Monzo or Starling and what you think of them, as I’d love to hear your feedback. If you enjoyed today’s video please give it a thumbs-up do consider subscribing. I’ll see you in the next video, good-bye.