I’ve long been a fan of challenger / Neo banks and what they are doing for customers, new and old. I’m semi-envious of their lack of legacy which allows them to glide seemingly through the market like a hot knife through butter!

So seeing Starling Bank Marketplace and Monzo Plus develop is truly great in my view. This is the Cake I refer to in my recent article about Value Added Services in Insurance - I even reference Monzo here and their plans for insurance, bill switching and much more. This is how I imagine, AND want, my providers all interacting and working together to make it seamlessly simple for me.

So, how seamless is it? I have to be honest, my first experience at leveraging the Starling Marketplace had been a bit challenging. I tried to use Habito to get a mortgage quote via Marketplace but it felt a bit clunky. My hope and expectation is that by being logged into my Starling account, the Marketplace would have sucked all the data, spending, and basic information from my bank account and then accelerated the whole process of applying for a re-mortgage. It didn’t. I have to admit I gave up and and went back to my broker I have used for 20+ years and they were ace. I often refer to Humans in the loop, and this proved it - plus worth its weight in gold. But I love Starling and what Anne Boden and the team are up to, so I persevere. 

Ok, so room for improvement. What about the cost? I had a look at Monzo Plus, as they have started offering travel insurance. Monzo has done an amazing job, built a wonderful brand and created the iconic Hot Coral card that’s both a symbol of banking freedom, a challenge to the incumbents, a chat up support card (no really, there are stories!), award winning service (knocking off First Direct from the top spot) and much much more. AS a result, they've also created a loyal fan (customer) base of close to 2 million customers (although there are various debates about how many of these customers are using Monzo as their primary account vs secondary account, but let's leave that aside). 

So I was excited to see Monzo launch travel insurance with InsurTech startup, Pluto. But good old Which, the brand I associate with my parents using to compare white goods in the 80’s and 90’s, has done a great review of how Monzo Plus - Pluto travel insurance compares to what's on the market today and the rest of the pack. And the simple answer is, it doesn't compare too well. The Pluto policy via Monzo scores 53% against an average of 64%, mainly due to the excess - £100 for Monzo, compared to just £40 for other traditional high street banks. It goes on to look at cancellation cover at a mere £1,500 compared to £3,000 for existing products in the market.

I guess this now comes down to, does convenience outweigh cost? Is there a premium for bringing things together here? In my personal view, there is a premium for doing things all in one place and not having to go elsewhere etc. But not at any cost. However, as I pointed out here - the aggregators already sell to you on the time it takes to get cover and go to any of them, or Pluto,  direct and its still three minutes after some basic questions. It's really very easy.

Being the insurance guy here, I may have a different view on this. Not all policies are equal and Which do a good job here. I would also say that when using any of the comparison sites, compare the detail too - not just the headlines. There are typically differences - some may be small, others may have more materiality (for example, the excess you have to pay and the overall cover in this instance). 

We have already seen Monzo put the convenience vs cost balance to the test. It was recently reported that their Savings tie up with OakNorth (another unicorn of the UK FinTech industry) costs more through Monzo that it would by going directly. See here for the breakdown. Going via Monzo, you would attract a rate of 1.14%, however going direct to OakNorth, you would get a market leading 1.44%, so as the FT put it, they are banking on empathy.

If this is the case, what does this 'packaging it up' fee get me then? Go back to 2016, and we know the Financial Conduct Authority (FCA) took a look at packaged bank accounts and applied new rules to ensure customers, and importantly sales of these and complaints were being handled correctly. Interestingly, travel insurance (along with gadget insurance) was one of their key areas highlighted as per below:

The review found that eligibility checks for travel insurance had improved, but firms had more work to do to check and record eligibility for other insurances, such as gadget insurance and motor breakdown cover. 

Revolut has been doing similar things - you can turn on travel insurance when you open their app in a new country. I think this is a good use of technology and location-based services, especially given their audience. One challenge though - insurance is a critical thing to have at time of booking - as Martin Lewis and everyone else in the industry will tell you - not when you get there. As an example, what happens if you book months in advance and then have to cancel for whatever reason (illness, you break a leg, unforeseen circumstances etc.)? This is what the insurance is for and its no good if you wait until you get there to switch it on.

Bringing these examples together, all financial services companies need to be careful to not disenchant customers by offering good-but-not-great products when those same customers came for great products and services. 

Perhaps we should be offering or allowing customers to chose what sort of cake they want. Cupcake for the basics, victoria sponge for the classic cover and a carrot cake for the full on all-singing - we have you covered, top cover and rates all round. Monzo did give a sneak peak of this thinking in a blog post about Monzo Plug bundles in August

So 10/10 for convenience and bringing together the ingredients, the flexibility and the opportunity. But, if we are going to do that at the detriment of the customer and we fail on insurance, we end up getting a bad name through association. Doing this just takes trust away again and means we end up reading the fine print, which we no let's face it , no one (ok very few, and you know who you both are!) actually does! (Also, why is it always insurance getting the bad rap sheet here!?)

In summary, all the ingredients seem to be here, and certainly very much coming together, but remember - we just want cake. Or as the old saying goes, no point buying a dog and barking yourself! It’s a good (positive) start, but there is work to be done here in my view.

If this is the Endgame, then bring everyone! (I had to get a Marvel reference in somehow!).