By Pradeep Saran, September 20,2023
Over 200,000 Monzo customers have eagerly joined a waiting list to access BlackRock’s investment offering, set to launch in the coming weeks. The UK challenger bank announced this initiative on September 12, and within hours, tens of thousands of customers had signed up. In just two days, the waiting list swelled to 200,000.
Monzo’s forthcoming investment service will provide its 8 million customers with online access to three BlackRock multi-asset funds, which, in turn, invest in a variety of passive funds.
This surge of interest highlights the potential for asset managers to collaborate with banks in the growing online retail market. Customer acquisition has historically been a significant challenge for robo-advisers and online investment providers.
Monzo’s waiting list for its investment service is comparable in size to the client base of Nutmeg, the UK’s largest robo-adviser, after a decade of operation. Other UK robo-advisers have struggled to attract anywhere near 200,000 clients.
The partnership between BlackRock and Monzo reflects the broader trend of asset managers and banks aiming to attract younger, digitally savvy investors. Exchange-traded fund (ETF) providers, in particular, view online services offered by banks and robo-advisers as a promising sales channel.
Banks possess advantages over start-up robo-advisers, including their larger client base and established financial infrastructure. Many robo-advisers attracted significant venture capital during a period of cheap funding, but rising refinancing costs have put pressure on their businesses.
Monzo’s offering will provide its customers access to three of BlackRock’s MyMap funds, categorized as Careful, Balanced, and Adventurous. The bank’s fees for these funds are lower than the standard ongoing charges, making it an attractive option for investors.
Despite Monzo’s predominantly younger customer base initially investing smaller amounts, asset managers need to align with their behavior to capture their business as they become more affluent over time.
Some Monzo customers have expressed concerns about the partnership with BlackRock, citing the asset manager’s sustainability track record. However, Monzo assures customers that the offered funds consider ESG (Environmental, Social, and Governance) impact, with specific carbon emissions reduction targets.