Monzo Bank Growth: Strategies, Funding Sources, and Business Plan

This report provides an analysis of Monzo Bank's growth strategies, funding sources, and business planning. It begins by assessing growth considerations using Porter's Generic Strategies and the BCG Matrix, followed by an exploration of growth opportunities using Ansoff's Matrix. The report then ...Read More

Planning for growth

Contents
INTRODUCTION.......................................................................................................................................2
TASK 1.......................................................................................................................................................3
P1 Contemplations for assessing growth.................................................................................................3
P2 Opportunities for growth by using Ansoff’s matrix............................................................................4
M1 Range of analytical frameworks to understand competitive advantage.............................................5
D1 Evaluate specific options and pathways for growth...........................................................................6
TASK 2.......................................................................................................................................................6
P3 Sources of finance with advantages and disadvantages......................................................................6
M2 Evaluate sourcing of funding and its justification for the appropriate source....................................8
D2 Critically evaluate sources of funding with justified argument..........................................................8
TASK 3.......................................................................................................................................................8
P4 Design a business plan........................................................................................................................8
M3 Examine sources of funding and justification for correct source of fund........................................11
TASK 4.....................................................................................................................................................11
P5 Exit or succession options for a small business................................................................................11
M4 Analyze succession or exit options for a small business comparing and contrasting the options....13
D3 Present a coherent and in depth business plan that determines knowledge......................................13
D4 Critical evaluation of the exit and succession options for a small business......................................13
CONCLUSION.........................................................................................................................................14
REFERENCES..........................................................................................................................................15

INTRODUCTION
Planning is measured as the system that involves a positive approach of an individual in
order to achieve all the goals and objectives in an efficient way. It mainly describes the security
of the future by carrying out different tasks and activities. In current situation it is the advanced
philosophy of a person that has been developed and enhance in accordance with achieving
success and expansion for the future period of time (Fu and et.al,2021). It also helps to extent the
influence on different policies that are applied to achieve growth. The report is based on Monzo
bank. It is an online bank which is headquartered in London. It is one of the earliest among other
challenger banks. The organization was founded in the year 2015 by Tom Blomfield. The below
report involves considerations for evaluating growth, Ansoff’s growth matrix, sources of
funding, business plan for growth and exit or succession options for small business.
TASK 1
P1 Contemplations for assessing growth
Planning is the practice of analyzing different variations as per the requirement and
achieves all goals and intentions. It is the procedure of the business enterprise to balance their
gap concerning where they company is and from where the organization want to attain after a
certain period of time. In context with Monzo it is the small and medium term enterprise and
wants to enhance the growth level with the expansion in America.
Porter generic strategy: -
It is described as a strategy that outlines a path and delivers better modest advantage to
the enterprise in this marketplace. It involves four different approaches which are used by the
banking in order to achieve benefits from their competitors. It also helps to implement different
strategies that help in doing business expansion.
 Cost leadership: - In accordance with this strategy it is used when company provides a
product reserves with least price that provides the provision and achieve highest market
share. Monzo uses this cost leadership theory to fascinate maximum number of customers
and provide them services in better way as compared to the competition.
 Differentiation: - It is the strategy in which organization initiates creativity and
innovation with respect to all productive services and achieve high sales and large market
share. Through this strategy business organization can develop their products and
services which is complete new in the marketplace (Divakara, 2021). Monzo also uses
this method in order to receive effective competitive advantage by gathering the attention
of large number of customers.
 Cost focus: - It is described as a strategy that is used by an organization in order to cover
niche market and offer different products and services at low cost. It has been
implemented by the company by knowing the completed evaluation of market and

satisfies the demands of their customers. Monzo gathers maximum number of customer
base by offering these services at minimum cost.
 Differentiation focus: - It is described as a plan which is used by the enterprise while
providing diverse goods and services. It brings a faithful brand image in front of all the
consumers and achieves long term accomplishment and growth in the arcade. Monzo
uses this plan while providing new services in the business location and through this they
gather maximum amount of revenue by developing overall profit and sales.
There are diverse levels of strategies which are implemented by the enterprise that helps to gain
large level of competitive advantage. The chosen company uses cost focused strategy in order to
enhance the level of productivity and overall profit. While measuring the expansion in the
business enterprise with the help of this company provides services at minimum level to grab the
attention of large customer base and achieve better profits.
BCG MATRIX: -
 Cash cows: - The products which come under this category have low level of market
growth but high market share (Dadashova and et.al, 2021). In context with Monzo bank
their earned revenue is used for all the operational expenses and the institutional banking
is considered as a cash cow for their bank.
 Stars: - On the basis of this there is high market growth rate and high market share. In
terms of Monzo bank their business banking is a star for them and it needs investment
because of enhancing growth.
 Question marks: - It defines high growth rate but low market share. As high growth
needs high level of investment in order to achieve objectives. For Monzo their retail
banking is considered as a question mark.
 Dogs: - It has both low market share and low growth rate. So, there are certain products
and services which need to be removed if they are facing constant failure.
Difference between BCG matrix and McKinsey matrix: -
Basis BCG Matrix McKinsey matrix
Visual differences It has only four cells matrix It has nine dimensions.
Comprehensiveness On the basis of this their
competitive strength is equal
to their market share.
In context with this matrix
they have more composite
portfolio.
From the above table it has been evaluated that nine cells matrix is more effective because they
provide better visual portrait and also separate their cells which are much closer to each other.
P2 Opportunities for growth by using Ansoff’s matrix
In accordance with Ansoff’s matrix it is used to enhance and develop diverse strategies
and methods which help in developing and implementing different plans by which an

organization achieves growth in their future time period. In accordance with this model it mainly
focuses of fulfilling the demands of consumers and gather different opportunities that lead to
sales. It is further being explained below: -
 Market penetration: - It is described as a strategy to increase sales in existing markets
with the help of promoting existing products (Smas and Schmitt, 2021). In context with
Monzo bank they offer all their customers with different services that motivate them to
try their service. They interact with each customer and developed their interest. The bank
used the method of augmented promotions in order to do market penetration. It helps
them in increasing the amount of revenue from existing markets only.
 Market development: - In accordance with Monzo bank there are two ways of market
development the first is to enter new geographic markets and enhance the operations only
and second strategy is to provide new products in attracting a particular segment of the
existing market.
 Product development: - It is defined as a strategy to do promotion of all the new products
in existing markets. Monzo bank does this by providing new services which includes all
the financial services at different rates. For example they used to motivate parents for
creating bank accounts for their children in order to develop a habit of doing saving.
 Diversification: - It is defined as a way to promote new products in new markets. With
respect to chosen bank they have diversified their financial segments in order to create
diversity in the company.
M1 Range of analytical frameworks to understand competitive advantage
Pestle analysis: -
 Political factors: - It involves certain intermediation of the government as United
Kingdom has more stability power so with respect to this they offer large level of

opportunities to the new business enterprise in order to measure more development.
Monzo has to face certain challenges in order to secure a banking license (Castiglione
and et.al, 2021). They also get an advantage with respect to wider level of acceptability.
 Economic factors: - It includes diverse aspects like foreign exchange rate, economical
condition of the country and many more. The financial value of America is more stable
and advanced in comparison with other countries. It acts as a good opportunity for the
enterprise while doing the expansion. There is also an economic downturn due to
pandemic which creates an impact on their valuations.
 Social factors: - It shares acceptance values of the community that has direct influence
on Monzo. In America the banking sector is accepted at high level so they it creates an
impact in positive way and achieve success.
 Technological factors: - They use more advanced technologies and build up a customer
satisfaction by fulfilling their needs and once the bank also get a support they work with
better efficiency level.
 Legal factors: - It replicates legal factors of the country that must be followed by each
organization. It develops arguments which are associated with wages, discrimination and
many more. In context with America there is high level of restriction which is followed
by enterprise and it helps in developing the brand image in the marketplace.
 Environmental factors: - It involves environmental protection and climate in
conservation. With respect to this America has strict laws regarding the safety of
environment so Monzo uses proper search of all the materials which is needed in the
banking sector.
D1 Evaluate specific options and pathways for growth
Monzo bank can mitigate the risk with the help of pleasing all the innovators through
social media platforms in order to promote their banking services. They can also use digital
platforms in order to connect with maximum number of customers (Harris, Metzger and
Duening, 2021). The bank has their own website through which they present all their services
and update it at continuous level. The chose organization can also apply the form of horizontal
integration. With the help of this they can expand their operations in the more effective way and
reduce the level of competition.
TASK 2
P3 Sources of finance with advantages and disadvantages
Source of fund supports a company to increase their capital amount while making a
contribution towards achievement of all objectives. With respect to Monzo bank they require to
expand their business operations and they have a secured fund of around £25000. On the basis of
this company has limited number of sources which requires other amount in order to raise their
funds which are further being divided below: -

Internal sources: -
It is described as a fund which is produced by the business enterprise and gained by
selling all assets and amount of capital in the market place.
External sources: -
It refers to a fund that is achieved by an organization in relation with other types of
deposit and involves diverse factors like bank loans, debentures and many more.
There are some sources which are used by Monzo bank which is being followed below: -
 Overdraft: - It is defined as an extra facility that is achieved by Monzo bank to its
superior consumers and through this they extend the additional limit of credit by which
specific amount is withdrawal.
Advantages Disadvantages
On the basis of this it has more level of
flexibility through which the selected
organization gets more liberty in order to
expand all the services ( Poe, 2021).
In return for the overdraft they also need to
pay certain amount of money.
 Crowd funding: - In this amount is gathered from maximum number of customers and is
performed from digital basis.
Advantages Disadvantages
Monzo bank has the benefit because
through this they use online platforms also
that promote their banking services.
It also faces a disadvantage as it has low
brand image in comparison with other
banking sector.
 Angel financing: - It means a source in which some investors capitalize in the
organization as per their level of interest and achieve both profit and sales as per the
condition of business.
Advantages Disadvantages
Monzo bank receives more benefit as they
are able to connect the awareness of all
investors.
The chosen organization also have a
disadvantage due to angel financing as all
the shares
There are different sources of fund in which Monzo bank uses various aspects in order to
develop more profits and generate more sales. As they have a very good position as well as

acceptability large number of consumers gets attracted and operations in the bank get managed
easily.
M2 Evaluate sourcing of funding and its justification for the appropriate source
Through the expansion of all digital platforms efficient level of connectivity has been
increased. There are various types of crowd funding like donation, rewards through which all the
contributors are matched with certain risks (Mohammed and Al-Bazi, 2021). In context with
angel financing they involve family and friends who can do investment if they are interested in
return of ownership. In accordance with venture capitalists they fund for business growth
through which they would have control over the company. With respect to Monzo bank the most
appropriate source for them is the usage of venture capitalists as it would provide them certain
ideas by sharing their level of expertise.
D2 Critically evaluate sources of funding with justified argument
Monzo bank can apply for all the sources of fund by sharing the ideas of different
services. They can receive funds from those vendors and investors who are interested in their
ideas and opinions. As business does their expansion in other country they can start to repay each
amount. It has been evaluated that for bank best source is venture capitalists as it provides their
enterprise many kind of benefits.
TASK 3
P4 Design a business plan
Business plan gathers large amount of information within that document that helps an
enterprise in achieving all targets within particular period of time. It is described as a written
document that comprises of all the related information which is needed in a business
organization in order to measure growth and enhance development. On the basis of Monzo bank
they need a business plan that supports them to achieve large level of market share in an efficient
way. It imitates the requirements of the chosen bank that consist all elements like vision, mission
and many more (Poorvaezi-Roukerd, Abdollahi and Peng, 2021). It helps in operating different
functions with more efficacy and abundance. Besides this it also supports the enterprise while
making diverse decisions for the welfare of the company. It also involves numerous policies
which are in relation with certain investments that are being enhanced to achieve large amount of
sales and profit. The main purpose behind business plan is to grow more positivism in the
business environment to achieve better results within the set deadline. With respect to the
selected company they work as an online bank and release various mobile apps for all type of
phones. The organization also gained public interest after analyzing all frauds and also initiated a
Ticketmaster data breach. There are various strategies which should be following by the
organization in order to gain better efficiency and productivity in the marketplace as now people
are very much attracted towards online banking services. It is further being explained below: -

 Summary: - Monzo bank is an online based bank in London, United Kingdom. It is
performing their operations through a mobile app and a prepaid debit card. It was
established in the year 2015 and has around 1551 employees. The organization presently
offers joint, business and personal bank accounts through which people can do
contactless payments and also transfer the money.
 Owner’s background: - Tom Blomfield was born in the year 1985. His initial business
was enabling a website for a local estate agent for which he charged £250 for the
webpage (Froehlich and et.al, 2021). He developed a new online bank named as Monzo.
He set up the bank even though he had no kind of good experience. Currently the
organization has around 4 million customers. The services are mainly for those people
who spend all their time just on their mobile phones and who want to get things done
within a second.
 Vision: - Monzo bank Ltd vision is to offer customers wide online platform for all the
banking services. They provide efficient level of technology and banking services.
 Mission: - They have the mission of gathering large number of customer base and build
up a best bank account around whole world.
 Competitor analysis: - Through this specific analysis it helps the company in identifying
different strategies, resources. With respect to Monzo bank they also apply different ways
in promoting online banking services.
Strengths Weakness Opportunities Threats
It offers more level
of flexibility in
comparison with
other traditional
banks.
Due to online
banking services
they don’t pursue
traditional banking
features.
By doing the
expansion to global
markets it develops
an opportunity for
them to increase
their customers as
well as market
share..
Due to the freezing
bank accounts it
creates an outcome
of poor customer
experience.
They have strong
level of growth in
terms of their
customer base.
There are many
kinds of security
issues which
directly create an
impact on customer
base.
It also creates an
opportunity for them
to explore into
trading as well as
investment banking
online (Qadir and
et.al, 2021).
Due to increased
level of competition
it becomes a threat
as well as
challenging
situation for their
bank space.
 Marketing strategy and pricing strategy: - The most significant part of their marketing
strategy was the aspect of crowd funding. As it is all about customer engagement. The
company also adopted a radical transparency approach through which information which
is sent to customers is available to each individual in the company.

Methods Plan
Trade fairs Monzo bank participates in certain
exhibitions and trade fairs in order to
promote all the products and online based
banking services.
Social media The organization also used certain social
media platforms on which different
services were being showcased in order to
attract maximum number of customers.
The pricing strategy of chosen organization is competitive pricing and in certain situations it
should be premium level of pricing. They offer online banking services at low cost in
comparison with other competitors. They can also expand their operations in other countries like
America.
 Financial plan: - It is defined as the evidence which is in relation with both inflows as
well as outflows of the company and helps to achieve all the targets in efficient way. On
the basis of Monzo bank they use different kinds of sources like external and internal
funds in order to achieve goals and objectives within the set period of time (Feliciano,
2021).
Particulars 31/12/19 ($) 31/12/20 ($) 31/12/21 ($)
Promotional event 7000 6000 4000
Implementing
technology cost
10000 - -
Advertisement
expenditures
6000 5500 5700
Catalogues 3000 4000 4500
Total cost 26000 15500 14200

From the above cash flow it is analyzed that company is in a better position because liabilities
are less than assets.
M3 Examine sources of funding and justification for correct source of fund
By looking at different sources of fund like crowd funding and many more Monzo bank
also uses different kind of funds. So, with respect to them it was been evaluated and justified that
their best basis of fund was to accept crowd funding. As with the help of this they were able to
attract large numbers of customers. It was considered as a best source of fund in the banking
sector.
TASK 4
P5 Exit or succession options for a small business
It is obligatory for the business enterprise to develop the exit and succession as it helps in
achieving the efficient level of outcome and it create huge level of influence on the overall
performance of the company. It offers the support to the company while dealing with numerous

suspicions that is enhanced in the marketplace on uninterrupted basis. There are different exit
and succession plan which is further being explained below: -
Exit plan: - It is described as the inclusive analysis of diverse factors that create an
impact on the performance of chosen company and also helps to measure various problems that
resist the profitability of Business Corporation. There are different plans for exit that must be
taken care by the organization like: -
 Selling in own market: - It is defined as a procedure in which a company provides their
products and services on sale. There may be a condition that all the products have been
purchased by the third party and it doesn’t create any type of negative impact as
everything would be sort out without reflecting the brand image.
Benefit Drawback
In accordance with this it affects the overall
goodwill of the company as the
organization is purchased by the third
party.
Monzo bank loses their talented employees
and due to this their quality of the business
also gets extinct.
 Winding up: - It refers to an element in which business sells out their assets in order to
achieve all the responsibilities and offer equal distribution to the shareholders.
Benefit Drawback
It is an advantage to the company as they
don’t have any kind of responsibility and
they are totally free from all legal
disagreements.
The chosen organization may lose their
market share and besides this it is also time
consuming process that ultimately creates a
burden on them (Chen and et.al, 2021).
Succession plan: - It involves diverse opportunities that are achieved by the company in
order to enhance all the profits as well as sales. In this the aspect of leadership will be conveyed
to another person. Monzo bank prepares to deal with numerous obstacles and for this they use
the concept of mergers and acquisition.
 Merger and acquisition: - It is defined as a procedure in which two business enterprises
comprise together in order to enlarge sales and all these companies have same size to
develop the growth level in the marketplace. In context with the aspect of acquisition one
company owns another one to enhance the level of profitability.
Advantage Disadvantage
It advances different skills and abilities and
connects finest and well-informed person
to gain more competition.
There are some drawbacks also in which
more complications gets generated as there
are different types of people and different
mindset and opinions.

There are various other exit options also like franchising, liquidation over time, family
succession and many more. It is further defined below: -
 Franchising: - On the basis of this it provides certain rights to other individuals in order
to sell their products with their brand name. It is efficient because it consist low amount
of risk and also leads to better idea of innovation but at the same point of time the initial
speculation can be high.
 Liquidation over time: - It refers to usage of organization funds rather than investing in
it. The advantage is that a good and efficient lifestyle is maintained. On the other hand
the company may face less sales value also.
M4 Analyze succession or exit options for a small business comparing and contrasting the
options
There are various exit and succession strategies like mergers, acquisition, franchising,
winding up and many more. In the aspect of mergers and acquisition it can be done with another
business enterprise in the same product line. In the phase of franchising it gives rights to another
corporation to use their name. In accordance with Monzo bank they also provide online banking
services to maximum number of customers through which it does not involve much cost.
Through winding up the company is fully free from certain disagreements that get occur. In case
of the chosen bank if they don’t want to have control over their business then sell their online
banking facilities to third party so that better control can be done and effective profits can be
earned.
D3 Present a coherent and in depth business plan that determines knowledge
It is very important for a business organization to set up an effective business plan so that
all goals and objectives can be achieved in a successful manner. In context with Monzo bank it
also generated a business plan in accordance with its vision, mission, competitor analysis,
different marketing strategies and many more (Jaarsma and et.al, 2021). On the basis of this the
company has always one mission to attract large customer base and provide all of them with
efficient online banking services. At the same point of time in order to achieve certain business
objectives they build up different marketing and pricing strategies. They mainly followed the
approach of crowd funding and radical transparency method also. Through this it was beneficial
for them to apply that particular strategy.
D4 Critical evaluation of the exit and succession options for a small business
Monzo bank is a growing company which has a large demand because in current world
each individual wants that they get online services and while expanding the business in America
they also have the demand for online banking services. It would be good for organization if they
use the method of mergers and acquisitions because it helps in exploring the market in a better

way. As there is high level of competition in the marketplace so it has been evaluated that for
their small business succession option of merger and acquisition is good.
CONCLUSION
From the above report it has been concluded that to achieve success planning is necessary
as it would lead to certain growth aspects. It is necessary to set up a proper business plan so that
no further consequences get arise. There are various elements which come in the category of
business plan like vision, mission, financial plan, marketing strategies and many more. In current
world everyone wants that their demands and any kind of problem should be solved within a
second. So, on the basis of providing consumers with online banking services it becomes very
helpful for them. It is also been examined that there are different opportunities for growth also
like in the form of product development, market penetration, market development. If a company
develops a new product or improves existing one also then it creates a great opportunity for them
to attract large number of customers. Besides this there are certain factors which create an impact
on them like in the form of economic, social, political factors and so on.

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