Monzo vs Chase vs Revolut: Battle of the Embedded Wealth solutions

Banks are finally starting to adopt wealth management alongside their daily banking capabilities.

Frankly, it's about time! 

The notion that a bank relationship would be limited to spending and borrowing, without helping to invest and grow, has for a long time struck me as fundamentally flawed. With the adoption of embedded wealth management, banks are taking a step towards regaining their position as the holistic centre of the financial needs of the everyman (or woman).

In the UK, although Monzo, Chase and Revolut are leading the pack in releasing their wealth propositions, all of them have taken a very different approach from one another. 

How are they different?

What are the advantages of their approaches?

In truth all of them are perfectly valid approaches, and in many cases even complimentary. Let's unpack and compare them..

REVOLUT - Embedded Trading

Revolut has prioritised access to trading of securities and crypto, favouring putting the control directly in the hands of it's customers, though across Europe it's also started to offer EFT's signalling the already-obvious plans for world domination and a far grander wealth and investment strategy.

The ability to buy specific securities has proven attractive across all demographics, but particularly so in the younger and more economically mobile. Interestingly, in many cases it was cryptocurrencies that sparked this interest in younger investors. These early adopters of technology are now actively prioritising this feature when selecting their bank, and for Revolut it's proven to be a potent draw in acquiring customers.

Mobile-based trading has come on light-years recently, with highly simplified User Interfaces and the presence of analyst recommendations to guide amateur investors.

Buying specific individual securities, whether traditional stocks or crypto, is a higher risk form of investment, since individual securities are more exposed to market swings than multi-asset investments, and banks implementing this should also consider moral obligations to educate users on investing.

Revolut has a great newsletter resource that users can sign up for within the app to learn more about investing, and another Neobank, MeDirect, have offered complimentary access to a reputable third-party that provides training and other resources on how to invest. Certainly, when enabling trading consideration needs to be given on how to support customers navigate the risk of investing.

MONZO - A simple Risk-based product set

The latest UK bank to enter the wealth space. Monzo has partnered with global behemoth Blackrock to offer 3 risk-weighted mutual funds.

What I consider really clever about their approach is that while it’s technically an execution-only offering, it has been simplified to such an extent that it really is accessible to anyone. Gone is the talk of things like EFT’s, asset classes and allocation - terms that might cause more confusion than help. The spotlight is on the main thing an amateur retail investor needs to know - what is the potential risk and upside.

With any form of advice - robo or otherwise - wealth providers usually have to undertake an assessment of the individual's goals and appetite to risk. The fact that Monzo has made their product so simple, has allowed them to dispense with the obligation to conduct this questionnaire. Doing so removes friction from the customer journey and should aid in adoption among their 8m UK customers.

This is a solution, built for the masses.

CHASE - Embedded discretionary / robo-advisory

Chase shrewdly acquired Nutmeg back in 2019 and swiftly sought to integrate it with its new neobank operation.

Unlike the propositions of Monzo and Revolut, Chase has a discretionary-based / robo solution where they gather information on the individual investment requirements of the customer and invest accordingly. There are a multitude of investment options and the solution is well suited for both amateur investors and experienced investors that want a well-tailored solution with plenty of optionality, rather than the high-level and simple T-shirt sizing offered by Monzo.

These types of solutions tend to attract higher investment values, and subsequently are a great solution for businesses looking to work with both retail and mass affluent demographics and maximise the revenue stream they create by adding wealth to their offering.

And the winner is…..

It’s horses for courses, actually. Since we’re in the awards season, here is how I would celebrate these solutions.

Best for beginners and encouraging quick adoption…… Monzo 

Best for highest balances and monetization… Chase

Best for customer acquisition and the 25-35 demographic…. Revolut

The perfect solution? Actually a combination of a brokerage solution (like Revolut) alongside either a Monzo or Chase style solution will be the perfect end-state for banks looking to offer wealth solutions.