Monzo Bank Review 2023: How Ethical Is Monzo?

Are you looking to find out if Monzo is a good bank? Is Monzo an ethical disrupter bank or is it following the unethical status quo in the banking world?

Monzo first started in 2015 and I’ve been signed up with them since 2018. I’ve found their app-based way of banking both excellent and convenient.

As I increased my usage of the Monzo app, it got my thinking about how they stack up from an ethical perspective.

I’d be more than happy with a bank that is easy to use and one that operates in a positive, ethical way towards society and the environment.

I think I almost assumed that because they were a ‘disrupter’ and ‘challenger bank’ who wanted to do things differently, they wouldn’t be doing the same things as some of the fossil fuel investing high street banks.

I took a deeper look into this to see if Monzo is ethical or not.

I’m glad to say that they’ve taken good strides in their environmental and social approach since I joined up.

Let’s take a closer look with my full Monzo review into what I found out.

What is Monzo Bank?

Monzo Bank is online, app-based bank operating in the UK with headquarters in London.

It was started by five tech-based friends who had a mission to shake-up the traditional banking system to give people more control over their money.

Monzo initially started life as ‘Mondo’, but a trademark challenge to the name put a stop to that. The challenge resulted in a naming suggestion contest and a new name – Monzo Bank Ltd.

Monzo is a fully authorised UK bank and regulated by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA). This means, yes, it is a real bank.

In 2016, Monzo raised £1m in 96 seconds via the Crowdcube investment platform, which I believe is still a record. They’ve since held many more rounds of investment.

Since their launch in 2016, Monzo Bank have grown rapidly and now have more than 5 million customers (correct as of February 2021).

Alongside private share ownership, Monzo Bank Limited is 29% owned by Passion Capital Investments and 13% owned by Thrive Capital Management.

Monzo green card
My fresh green limited edition Monzo card

Is Monzo any good?

Let’s tackle if the Monzo banking app is any good.

Initially I opened the account purely to use as a prepaid card when abroad thanks to their free cash withdrawals and no fee payments. But I’ve found that I’m using my Monzo account more often now in the UK too.

In my opinion, Monzo have developed a great app. It’s very user friendly and with some great features.

I particularly like the ‘pots’ feature to help save for specific events and how easy it is to pay friends and family.

You can label all of your ins and outs to help see where your money is going. Then on the ‘trends’ tab you can better understand what categories your money is being used in. You can even get a weekly report sent to you, plus you can also set targets and organise your spending.

Different accounts with Monzo

Monzo offer a few different accounts that you can apply to through their app.

Current account

This is your standard free Monzo account with all the features I’ve described above.

With a normal current account, you get their iconic hot coral debit card.

what is monzo bank

Monzo Plus

Monzo Plus is a way to manage all your other cards and accounts in one place. This includes other bank accounts and credit cards.

You can then categorise all of your spending to give yourself a birds eye view of what’s happening.

The Monzo Plus account is £5 per month with a minimum term of 3 months.

Monzo Premium

The Monzo Premium account offers many more benefits. Including in the £15 monthly fee is phone insurance and worldwide family travel insurance.

With this account you will also earn interest on your current account and regular savings pots. When you’re on holiday, you’ll be able to withdraw £600 a day for 30 days without charge.

With Monzo Premium you get a fancy white metal card that might turn a few heads.

The Monzo Premium account is £15 per month with a minimum term of 6 months.

Monzo Joint Account

Just like a regular joint account, you can now manage your finances with your partner.

You’ll each get a separate card and be able to see who’s spending all of your money!

Monzo Business

Monzo Business offers small businesses a great way to manage their finances.

There is a free version (Lite) but this looks a little limited. For £5 a month you can sign up for their Pro business account.

The features for this are much better, including: tax pots, integrated accounting, invoicing and multi-user access.

Having recently gone self-employed, I’ve opened a Monzo Business account. And it’s great. You can read more on ethical business bank accounts here.

Is Monzo an ethical bank?

monzo bank green card

Ok, so you know Monzo is a good option for your banking.

The next question for many people: is Monzo ethical?

Monzo have improved their ethics and sustainability over the last couple of years and are now one of the leading banks in the UK. But I don’t think they can be classed as fully ethical.

According to Ethical Consumer, a trailblazing ethical body who look at how a company fairs with the environment, people, animals, politics, its company ethos and product sustainability, they also put Monzo up there as one of the most ethical banks you can use.

The most ethical bank is Triodos. They are still very much leading the way and a much more sustainable choice than any other bank. Triodos have an ethical investment policy and make it crystal clear where all its money gets invested. You can read my full Triodos review here.

I think the Monzo ethics are now starting to catch Triodos up, but they are still way, way off.

Other banks scoring well include Nationwide and Starling Bank, who are very similar in that they a new tech-based disrupter bank. You can read more about the most ethical banks UK here.

Banks not doing well from an ethical point of view include: Tesco, Barclays, HSBC and Natwest.

Let’s take a look in more detail at why Monzo are more ethical than most.

Monzo sustainability: Their environmental impact

Monzo are a branchless digital bank. They do have a number of offices around the world but their entire customer facing side only exists online.

This immediately lowers their carbon footprint when compared to high street banks, but as a growing business they still have a large environmental footprint and contribute to climate change via carbon emissions.

Monzo have published four environmental commitments:

  1. Net zero emissions by 2030 – Their goal is to reach net zero emissions as a business by the year 2030. This includes measuring the entire value chain footprint and removing the rest.
  2. Carbon footprint reporting – Measure and report on their full carbon footprint every year and share the results publicly. This includes Scope 1, 2 and 3 reporting, which is very good.
  3. Regular reporting to executives and board – Strong company governance for their environmental work with regular reporting to executives and board members, who have representatives responsible for their climate policy.
  4. No fossil fuel investing – This is a big one. Monzo have pledged to not invest in fossil fuel-based energy companies (or arms or tobacco companies). This is a cornerstone for any ethical investing policies.

Monzo have also said they want to make their environmental messaging and reporting as clear and accessible as possible.

When I published this post in February 2021 all Monzo had declared to cut their carbon output were four areas of focus which included: card packaging (to be fully recyclable), computer servers that should be carbon neutral, offices stocked with animal friendly, organic products and a cycle to work scheme.

All good stuff, but pretty basic.

Since that however, they have certainly upped their environmental game.

They are now published a full environmental carbon report which includes all Scope 1 (direct company emissions), Scope 2 (electricity and energy they purchase) and Scope 3 (the emissions from their supply chain and 3rd party companies). This is comprehensive.

For me, this makes them one of the most ethical banks in the UK.

Helping them build and measure their environmental programme is the climate software company Watershed. You can have a look at the full pledges and other actions on Monzo’s protecting the environment page.

Monzo and its social impact

In regards to their social impact, Monzo have identified another four main areas of focus:

  • Accessibility – increasing performance so that Monzo works for everyone, including those with disabilities affecting vision and hearing.  
  • Vulnerable customers – helping customers in difficult situations stay in control of their finances
  • Financial inclusion – helping as many people as possible get access to finance and financial help. Their Banking For All campaign aims to help vulnerable groups, health problems and recent immigrants.
  • The environment – reducing their negative environmental impact

Monzo have also pledged to be a minimum living wage employer, including all direct staff members and third-party contractors.

Monzo ethics: What do they do with your money?

Monzo Bank lend out just 3.5% of deposits stored in current accounts to people and businesses in the form of overdrafts and loans.

Monzo state that they don’t sell financial products, such as mortgages or credit cards.

They do offer Cash ISAs and saving accounts though for you to earn interest on your money. Please note, these official saving accounts are different from the ‘pots’ feature (which is really good) that you can create as a way of saving money for different occasions without interest.

For their Cash ISAs and other saving accounts, Monzo use third party banks. This certainly muddies the waters of clarity and transparency from an ethical point of view as you now need to know how all these other banks operate.

These third-party banks include (or have included in the past) Paragon, Shawbrook, Charter Savings, OakNorth and Investec. Transparent investment policies are quite hard to come by, which does leave you a little in the dark.

Take for example Charter Savings Bank. They are a UK provider for UK savers and use savings for bridging loans and mortgages. How do you know what sort of businesses they are helping out? You don’t.

Investec are a company associated with oil and gas financing. To be fair, Investec are no longer listed as a savings partner on the app, but they certainly were.

It would be great if Monzo offered ethical Stocks & Shares ISAs too. Maybe one for the future?

Of course, you’d expect banks including Monzo to also invest money to provide them with long term sustainability.

Where does Monzo invest its money?

When sussing out Monzo’s ethics, a big question to ask is does Monzo invest in fossil fuels?

Since the update, Monzo have categorically stated that they do not invest in fossil fuel companies, in the arms trade or tobacco. This is very good.

They also state that they invest customers deposits safely and ethically. Most customers money are held in central banks, such as the Bank of England, in the form of government bonds and quasi-government bonds.

Monzo do lend a proportion of money stored in current accounts (currently 3.5%) in the form of overdrafts and loans. This is down from 25% in early 2021 which is good news.

I also had a quick look at Passion Capital (who own 29% of Monzo) and Thrive Capital Management (13% owners) but again this doesn’t yield much information on investment policies.

If you’re interested and want to learn more about sustainable investment, read my easy to understand blog on ethical investing explained. You might also want to read my CIRCA5000 review, the world’s first impact investment app.

Monzo bank review wrap up

In my opinion Monzo is a good bank to manage your finances with.

They have an easy to use app with some handy features. For the eco and socially conscious people reading this, Monzo are fairly ethical but by no means perfect. The greenest choice is Triodos.

Monzo have a plan to reach net zero emissions, undertake full carbon reporting and don’t invest in fossil-fuel based energy companies.

I hope this 2023 Monzo review has helped you and hopefully they can continue to improve on an environmental, social and ethical front.

If you like the sound of Monzo, you can sign up for a Monzo account here and get £5 free

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