A Report on Disruptive Innovation and Monzo Bank's Strategies

This report provides a detailed analysis of Monzo Bank's application of disruptive innovation theory. It begins with an introduction to innovation theories, focusing on the principles of disruptive innovation and evaluating its strengths and weaknesses. The report then provides background information on Monzo Bank Ltd, highlighting its innovative approach to mobile banking. The core of the report examines how Monzo has implemented disruptive innovation to challenge traditional banking models, including its mobile-first approach, user-friendly interface, and focus on customer experience. The report analyzes specific features and services offered by Monzo, such as money management tools, budgeting features, and international money transfers, illustrating how these innovations have disrupted the existing banking landscape. The report also discusses the limitations and challenges faced by Monzo. Finally, the report concludes by summarizing the key findings and implications of Monzo's disruptive innovation strategy, emphasizing its role in reshaping the future of banking and offering insights into how other companies can adopt similar strategies. The analysis includes references to relevant academic literature and industry reports to support the arguments and findings presented.

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Managing Innovations
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Managing Innovations 1
Table of Contents
Introduction......................................................................................................................................1
Theories of innovation.....................................................................................................................1
Principles of Disruptive Innovation.............................................................................................2
Background of Monzo Bank Ltd.....................................................................................................6
Innovation role in Monzo................................................................................................................7
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

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Introduction
Innovations are beneficial for social, commercial, and economic point of view for an
organization. Organizations are based on the innovations and marketing strategies. Many things
are affecting organization processes, which are business strategies and innovations. Most of the
organizations are having their personal innovation centre or research and development
department for innovation in their fields to better growth of organization. This report will
provide details about innovative innovation with their theories and principles. It is a way to
handle competitive challenges of industries. In this report, disruptive innovation will discusses in
next parts. It will provide strength and weakness of the disruptive innovation theory.
This report is based on the Monzo bank Ltd. It is a bank, which provides advance facilities with
technical specifications. This report will provide details about the disruptive innovation theory in
Monzo Bank Ltd. Monzo are a group that is having highly technical company, which was
founded in 2015 (MONZO, 2019). It is having a new concept in the field of banking industry.
This report will provide details about the company as well as role of disruptive innovation theory
for their success. Monzo is a new app-based bank in UK. It is a digital mobile-only bank
(BorneDigital, 2018).
Monzo introduced new concept for managing spending and banking through a mobile-based
application. This is a disruptor for baking industry. Disruptive innovation provides high profit to
the company. In the next section of this report, disruptive innovation theory will linked with the
Monzo Bank Ltd (Caldwell & Verl , 2017).
Theories of innovation
Innovation is a fresh idea for solving a problem or reducing efforts for a work. Innovative ideas
are helpful for the changing the game of market. Innovations have divided in four types, which
are architectural, radical, Incremental and disruptive innovation. All those are categories based
on the market and technology. It is depend on the new and existing market as well as new and
existing technology (Pinkse, et al., 2014). Many technologies are presented in the world but they
are not used in business. Some technologies are having increments in their functionalities. Few

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innovations are having game changing capability. They change the current market and
innovative a new environment, such as touch screen technology in mobile phone ( Geiger, 2018).
Source: ( Lopez, 2015)
Disruptive innovations are those innovations that are created in existing market with new
technology, such as Apple iPhone. Disruptive innovation term is first time framed through Clay
Christensen. According to Clay Christensen, it is states that reinventions has created threatened
to the established companies. Disruptive innovation is start with the small profit but it will
provide high profit in short time.
Disruptive innovation is a way to create new concepts for a business processes. Innovation is
having a huge role for revenue, profit, and growth of an organization. Disruptive innovation is
creating a new market of existing market through the technological changes (Nelson, 2013).
Principles of Disruptive Innovation
In business, successes is getting through many things, one of them is disruptive innovation.
Organization can change their existing market through disruptive innovations. There are some
principles of the disruptive innovation that are based on different things. Past is a great teacher,
therefore, innovators are always thinking large beside their past. They have different objective
for imagination (Morris, et al., 2010). Organizations are always motivating their employees for
reinventions in current technologies for better growth in existing market. Manager should
embrace failure of their employees, as success is not an easy task. Therefore, they make

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numerous trials for getting success. Disruptive innovation is an example of looking different
from others. It is a way to create business at high level (Alexander, 2014).
Source: (ITONICS, 2018)
Above diagram is shows disruptive technology growth in the field of innovation. There are many
to change business processes. Disruptive innovation is a process that makes changes in the
growth of an organization in short time (Markides, 2006).
Source: ( Christensen, et al., 2015)
In recent year, many articles have published on disruptive innovation. It is a way to make
changes in a process for getting success. Therefore, it is not necessary that follow a same

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tradition in business. Organizations can change their basic business ideas through new innovative
ideas to grow in marketplace (Goodman & Dingli, 2017).
Source: ( Christensen, et al., 2015)
According to the Christensen, disruptive innovation is providing better profit as compared to
other innovations. New entrants are changing a complete scenario of the market. As an example,
iPhone is changing their market through different disruptive innovations, such as face
recognition system, and many more. Although they change their existing, market though new
product. It is a huge issue in front of established companies that they change their market
through new technologies. It is a way to increase their customers from the disruptive innovations
( Schweiger, 2019).

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Disruption is a process in which changes in business of an organization. It is not related to the
product and service at one fixed point.
Source: (Caldwell & Verl , 2017)
Red ocean and Blue ocean strategies are beneficial for the reducing competitive fear for the
companies. Disruptive innovation is creating a new market place, which is not having any
competition.
Source: (Caldwell & Verl , 2017)

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It is not necessary that every innovation is providing growth to the company. Therefore, it should
base upon the buyer value and cost (Drucker, 2014).
Background of Monzo Bank Ltd
It is first time in the banking industry that they operate their different operations though mobile
application. Monzo started for mobile-based banking in UK. It is a way to use technology for
saving different things. There are so many different things were implemented by the Monzo bank
Ltd. They build a new kind of bank though technology and innovation ( Jayne, 2019).
Source: (MONZO, 2019)
Monzo bank Ltd has more than one million customers that are using their baking services, such
as mobile baking and debit cards to manage their transactions.

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Source: (MONZO, 2019)
Monzo is believed that they provide an alternative of the past in banking sector. They provide
simple baking for everyone. They take suggestions from different communities then they make a
new feature based on the feedback. They can build something that is love by all. They are
growing very fast in East London. They have a transparent system; anyone can see their public
page anytime. They were focused on solving problems of customer. Monzo want to make the
baking industry better for everyone though Monzo’s products and services.
Innovation role in Monzo
Monzo Bank Ltd used disruptive innovation theory in they change existing market through new
technologies. Monzo created this mobile application for manage money in a better way with high
security. It provides better way to transfer money though mobile application. It is a fast way to
transfer money to anyone with minimum time. It provides facility to manage monthly budgets
for spending on different things, such as going out, groceries and many others.
It has a facility to manage to see an overview of personal account any time. It will provide
notification if customer is spending too fast. It will provide fast notification before the receipt
finishes printing. It provides a facility to transfer money through Google pay or Apple pay as per
customer’s mobile application. Monzo master card works all around the world.

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Source: (MONZO, 2019)
User can transfer money in seconds. There are different ways to transfer money to another
person. User can pay nearby friends over Bluetooth. It provides money transfer at up to 8x
cheaper than another banks at international level. It has a high security in term of card lost.
Customer can freeze their card through mobile application at temporary basis. Customer’s
accounts are safe through Financial Services Compensation Scheme (FSCS).
Source: (MONZO, 2019)
Monzo is having best products and services for their customers. It is a huge change in the
economy of UK from Monzo Bank Ltd. There are many benefits of the Monzo to the customers.
It is playing a key role to maintain different things, which are related to the investment of money.

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Source: (Gettel, 2017)
Monzo provides a facility to maintain investors and dependents through mobile application ass
shown in above diagram.
Source: (Gettel, 2017)
Monzo app will provide notification, if customers are spending too quickly. It is a best way to
limit spending.
Disruptive innovation is set new standards to company. It demonstrates a different mode of
strategic thinking. Blue ocean strategy is redefining the standards from a new products and

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service. It creates a new market space from product and service. It is not displaces existing
products and services.
Both disruptive innovation and Blue Ocean advocates recognize the need to use their
competition as a benchmark for performance. In present world, companies are having high
competition from their competitors, their margins are shrinking, and their competitors are
growing in the market. Therefore, disruptive innovation approach is useful for survive in market
with their present and future customers (Hessman, 2017).
Monzo is an example of disruptive innovation. It makes a market that is not having a competitive
term. In addition, present market is still same, such as street bank are still working. However,
customers are having internet banking facility but Monzo is providing all those facilities in less
price with high security and classification.
Monzo bank ltd is also having few limitations, such as cash and cheques. People are still using
cheques for money transfer. However, Tom Blomfield said the bank ‘will not be right for
everyone’. According to tom, company targets those, who value technical innovation and
convenience.
Monzo has released an application program interface, which is based on OAuth standard. Google
and amazon used OAuth for their different services. Monzo’s responses are encoded using
JavaScript Object Notation. Monzo is having mobile application for both Android and iOS based
mobile phones.
Source: (Gettel, 2017)