The Traveler's Dilemma

People will look for the best deal when comparing two identical products for the purpose of a price benefit. Whether it be a pair of shoes, a book, a film subscription; irrespective of it being online or or the high street. So having recently come back from holiday, and putting Monzo and Starling through their paces, why should travel currency exchange be any different?!

For too long, your local travel agency, Post Office, high street bank and online merchant have held the monopoly; charging fees for accessing your cash abroad, and often ensuring you endure a cumbersome and unfriendly customer experience that has often left you taking a form of identification to pick up, or waiting at home for a delivery. Perhaps you've left it too late and got ripped off at the airport, or found out the exchange rate has changed more favourably whilst away. Indeed if you'd have exchanged Sterling into USD or Euros the day after the Brexit vote in June 2016, you'd have been much worse off than you would have 24 hours earlier.

That is until digital-only banks arrived...and this post will show you the ease, speed and how further value can be obtained in using your card abroad. How digital banks can scale this to an international operation as they apply for various banking licences and painstakingly map evolving legislation to products remains to be seen. Yet for UK Fintechs, the "Fintech Bridges"initiative is a helpful offering to ameliorate and guide on such matters.

In short, digital banks have made it it their mission to evolve the customer experience (CX) in the banking industry. Where high street banks fret and spend millions in strategising how to ween themselves off legacy IT, digital banks have no such issues. Those banks who've buried their heads in the sand and resisted going digital, or see CX as an expensive 'nice to have', well, customers are no longer the only change driver.

The UK Competition and Markets Authority (CMA) has placed CX at the heart of their agenda to make banking more competitive. Indeed as the industry comes to understand what initiatives like Open Banking mean, and the legislative (and financial) importance of the latest Payment Service Directive (PSD2), digital-only banks have already revolutionised the game.

The Value is in You!

Free of legacy costs and amidst of multiple funding rounds, the race to build a strong and sizeable customer base is truly on within digital-only banking...by putting you at the heart of their operation by giving you the power to analyse your spend and budgeting options.

So when digital-only banks, Starling and Monzo offer every customer a fee-free, live and direct currency exchange rate, which bank performed better on a recent trip abroad to Tenerife?

1. Digital Engagement

Before leaving the UK, both Starling and Monzo's respective social media teams were on point in helping to spread the love, and rightly so...With over 3,500 Twitter impressions from a single Tweet, eyes are firmly on coverage, both positive and negative.

Monzo recently handled an payment processing outage to applause from its customers and avoided a potential banana skin of ending up in major news outlets for all the wrong reasons. Top marks for quick response, engagement and remedial plan of action.

A personal reply from Starling CEO, Anne Boden and both social media teams was warmly received and generated multiple engagements and interactions. Digital interaction via social mediums, such as Twitter are key to driving that customer experience and the concept of a 'community' of users.

Indeed, it would be interesting to hear how both Monzo and Starling utilise social media KPIs and interactions to improve CX and product development.

Winner: Starling

2. Load and Spend

Both Monzo and Starling's currency exchange platform is underpinned by a direct link to Mastercard's daily rate, both don't charge fees for ATM withdrawals nor card payments abroad. This was hugely beneficial especially as 'cash is king' in Tenerife, and Spanish high street banks like La Caixa and BBVA offered a less competitive rate than Monzo and Starling!

Both apps offer multiple ways to top up your balance. Monzo's ability to top up via a Balance Transfer adds a sense of regularity to longer term spending habits and the instant notification of the exchange rate was welcomed, especially

when considering whether to withdraw cash or top up the balance. Monzo also has the added benefit of top ups below £50. Handy if, like me you wanted a quick meal in the airport before flying home.

With Monzo you can track spend via geo-location, and as most signs in Tenerife are in Spanish and you're wanting to pass on the recommendation of a bar to people in the hostel, this was an easy to use and really impressive feature! Muey bien! Sadly never got to use the 'split cost' feature in the Monzo app, however my travel partner made sure the exchange rates and lack of fees were capitalised upon in our cash withdrawals.

The geo-location feature struck up conversations with people I met at the hostel, who were keen to know more about both banks in their respective countries...sadly most hadn't heard of either bank. Monzo's coral coloured card proved the biggest material hit.

It's important to note here that Starling's app has been in Beta only since March, and whilst it's iteratively improving, Monzo has stolen an early nice to have feature march on its rival.

Key to note as part of its product roadmap, Starling has recently announced a partnership with TransferWise that from Summer 2017, will allow users to send fast payments to each other in up to 35 currencies and at a significantly lower cost than compared to high street and online competitors. Given the level of liquidity TransferWise require to operate at such a scale capacity, this should be a partnership of a long-term nature.

Indeed Starling has hedged its bets on the Open Banking, open API platform partnership route, whereas Monzo is determined to depend on the prowess and skill of its own development teams. Keep an eye on this area!

Winner: Monzo

3. Features and Usability

The revolution of mobile banking heralds the ability to analyse spending and budgeting in ways not offered by high street competitors.

So when you spend abroad, in a country where cash is the predominant force in every day transactions...what then?!

Well, err...Monzo and Starling weren't quite sure either to an extent. Besides the fee-free cash withdrawals, Starling Beta as of yet doesn't offer the breakdown of spend by category like Monzo does.

Where both apps lack usability and could draw future value for users in this area is a 'nearest ATM' feature, with a rate exchange comparison for banks, and an ability to allow users to manually breakdown cash withdrawals into categories according to what they've spent the cash on within the app.

Although not needing this feature, it was more than reassuring to know options such as freezing my card, ordering a new one with ease, and even the multiple means of contacting a person (and not a machine) in the support teams were available across both apps.

Where Monzo facilitates wider education about using your card abroad was a community FAQ feature. Well designed, helpful and easy to use, this has been harnessed in such a way to engender a wider communal spirit; integrating travel tips with personal user experiences.

Winner: Monzo

On the face of the review, both apps performed well. Monzo has quickly and well-designed many capable features to aid, analyse and support users traveling abroad. Starling's future product development through continued beta testing and partnerships should begin to bear greater usability and relevance later in 2017.

On this occasion...

Overall Winner: Monzo