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Post-Covid Business Environment Analysis Of Monzo Bank Analysis

Introduction - monzo pestle analysis

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SMBs have had to deal with the substantial financial consequences of lockdowns and operating limitations at the national level during the last year. Pandemic ripples across economy and communities with 99 percent of enterprises and 33 percent of jobs in the UK accounted for by SMEs, accounting for 21 percent of the economy’s sales (Sahay et al., 2020). The COVID-19 problem has had a significant impact on the performance of UK small and medium-sized enterprises (SMEs). As a reminder, there are a number of variances across industries in the UK.

More than 90% of surveyed SMEs in construction, logistics, and agriculture report income declines, while SMEs in the scientific, financial and insurance, and educational fields are the least impacted. An alarming picture is painted when we consider UK economic forecasts that are pessimistic, as well as revenue patterns for small and medium-sized businesses (SMEs). Nearly one in five small and medium-sized businesses (SMEs) polled expect to be out of business by August 2020 (Papadopoulos, Baltas & Balta, 2020). It is thus important to consider both external and internal influences on the UK SME, Monzo, in this article.

Company Background

Monzo is a UK-based digital bank that exclusively works with mobile devices (Carey, 2018). ‘Challenger banks,’ as they are referred as in the UK, are a new breed of app-based banks. Since limitations on UK banking licenses were eased in 2017, the firm was allowed to offer customers a current account in addition to its mobile application and pre-paid debit card. With more than 750,000 current account holders, Monzo has processed more than two billion pounds in transactions thus far (Omarini, 2017).

External Business Environment of Monzo Bank

Political Factors

Politics may have a significant influence on the banking sector as a whole. ‘Politicization’ of banks after takeovers and bailouts may represent a serious danger to their financial viability, according to one analysis (He & Harris, 2020). Monzo as well as the banking sector may be impacted by the outcome of the UK general election in December, since a change in government or new rules may be introduced and such feats may affect the employee relations as well.

Economic Factors

The cost of economic fraud as a percentage of global GDP in 2017 was £3.24 trillion, making this one of the costliest global issues (Moore & Collins, 2020). Ultimately, the exact effect of Brexit cannot be completely understood until the negotiating process is completed and a deal, if any, has indeed been made. As a result of this, firms like Monzo must be able to adapt to whatever the final decision may be.

 Sociological Factors

The rise of digital banks in the UK is being fueled by shifting customer expectations, which might be an excellent opportunity for Monzo. In addition, the use of mobile banking by UK clients is on the increase, with digital channels becoming the most popular form of personal finance in the country. 71% of all banking contacts are digital, opposed to 6% in branch, and 59% of UK customers claim to have used mobile applications to obtain financial services (Collier & Mayer, 2020). This indicates a significant shift in cultural preferences in the UK, where an increasing number of individuals choose to conduct their financial transactions online rather than in-person. When it comes to employee satisfaction, data shows that there’s a growing divide between online banks and brick-and-mortar institutions, with online institutions coming out on top.

According to a Mastercard-commissioned survey, convenience is still the most crucial benefit of digital banking solutions, but Europeans are also more concerned than ever before about security when considering whether or not to use these services (Hepburn et al., 2020). This in turns streamlines the banking operations making the operatives of staffs easier, automated and stressless which adds to the development of better relationship with employees.

Technological Factors

The use of technology in banking has increased dramatically, yet privacy and security remain fundamental issues, posing significant obstacles to widespread acceptance. Digital banking services have been negatively impacted by TSB’s online banking issues, which have resulted in customers being unable to access their accounts (Muparadzi & Rodze, 2021). Monzo will have to reassure customers about these sorts of concerns and explain solutions they have in place to prevent them if their reputation has been harmed. Two-thirds of ING Bank customers have never used voice recognition or fingerprint access to enter into their banking app, according to one of the bank’s studies.

These findings might be troublesome for digital-only banks since it implies that individuals may still choose a more conventional approach or are not ready to use the most current technologies to enable their banking services. Monzo may want to wait until customers are more comfortable with the digital-only strategy before using new technology like speech recognition in their marketing campaigns. The corporations will be less likely to overburden their customers as a result of this. Other research has shown individuals aren’t eager to embrace newer digital methods of managing money despite the fact that the vast majority of people think that the newest financial technology should be accessible.

When it comes to digital-only banks, just 12 percent of Britons have completely gone over, and 47 percent of those who use services like Monzo and Revolut, retain less than $1,000 in them (Gnevko, 2020). However, if new digital techniques are shown to be helpful, trustworthy, and socially acceptable, the adoption of new financial technology might be quick in the future. Furthermore, 85% of people prefer not to speak to a robot while banking, and just 15% of people want institutions to invest in voice-banking services driven by AI, according to a survey.

Environmental Factors

Businesses and people are under increasing pressure to reduce their carbon footprint and invest in renewables as a result of the environmental crisis. Many banks throughout the world are addressing energy management in particular, and several have offered customers the option of becoming paperless for their statements and transactions (Kenward & Brick, 2020). Since companies are under increasing pressure to be more eco-friendly, cutting down on paper consumption with digital-only banking can only be a good thing. Online banks also minimize the need to go to a bank, resulting in lower emissions from transportation. This is an issue that Monzo and Revolut should emphasize in their marketing efforts, since it is a pressing one that many customers are grappling with right now. According to consumer surveys, 88% of people want firms to assist them in becoming more ecologically friendly.

Legal Factors

Because of the political unrest in the United Kingdom and the influence of upcoming elections there in December, there is a greater likelihood that laws and regulations will be changed at this time. In the end, Brexit is likely to lead to regulatory changes across all sectors, including banking. Monzo might face a slew of legal challenges if new legislation requires them to function in a different way than they already do. There have also been new charges of AML problems, false accounting, and toxic management culture among high-growth digital banking businesses that may affect the employee relations significantly.

Internal Factors Affecting Monzo Bank



Easy-to-use software features such as spending alerts and a budgeting system that is simple and easy to understand for customers to utilize. Options for card freezing and other forms of security may comfort customers. Monzo’s innovative energy switching mechanism might help it stand out from the crowd. In terms of ethical current accounts, Monzo was recognized as one of the finest. FSCS deposit protection is available to Monzo customers, providing additional peace of mind that their money is secure (Omarini, 2017). An iPad, iPhone, iPod touch or Apple Watch may all make use of the software.

It was found that the lack of human connection was appreciated. Due to investments in personnel and technology, Monzo presently operates at a loss, which is quite dangerous for a firm. It also seems that losses will continue to rise (Meager, 2019). Potentially damaging the company’s image and raising concerns about the security procedures of digital banks, a breach occurred.



As a result, 40% of people between the ages of 18 and 27 choose to use a mobile banking app as their main bank rather than a more well-known brand. Following the footsteps of Mimiro, AI is being used to combat fraud (Gnevko, 2020). For example, expanding into Asian regions, where digital banks have begun to gain traction.

To better compete with banking institutions, traditional banks are investing inside and working with new technology companies. This might harm digital-only banks. Only a small percentage of consumers are banking with digital banks as their primary bank, and they’re retaining a smaller quantity of money in their accounts (Standaert, Muylle & Cumps, 2020). All Brexit and Covid-19 have the potential to destabilize the economy and change banking laws and legislation, both of which might have an adverse effect on Monzo.

Evaluation of Hybrid Models to Support Employee Relations

Hybrid Model of Capital Management

Customer service agents, sales representatives, and others all fall under the category of the hybrid business model. A generalist or multi-skilled individual is included in this paradigm rather than someone with a specific set of talents. As a result, they are more likely to come up with new ideas for the company since they can handle many tasks at once. In a hybrid model of human capital management, talent acquisition is significantly easier. An applicant’s unique skill set is more important than his or her interview procedure and formality (Baron & Armstrong, 2007). Human resource managers must recruit people with a generalist profile who do not have a lot of input in the organization’s main choices, policy formulations, or goal and objective-setting. They must. The hiring of hybrid model workers may be done in only a few phone calls or meetings (Baron & Armstrong, 2007). Thus, through the effective integration of this model employee interaction and coordination becomes more streamlined and responsive which makes the employee relations significantly better.

Hybrid Model of Human Capital Management

Apart from this another Hybrid Model can be taken into consideration as well; this includes the Citigroup Model: A True 50/50 Mix.

Citigroup Model: A True 50/50 Mix

There is an estimated 50/50 mix between those working remotely and those who come into the office three days a week. When it comes to hybrid working, some employees are able to work remotely every day of the week, while others have to return to the regular workplace. The CEO also instituted a Friday restriction on video meetings for the whole firm as an added benefit. As additional positions are introduced, the firm thus continues to refer to them as "hybrid", "remote", or "resident" employment. This ensures a sophisticated employee relation (The Digital Workplace, 2022).

Monzo Bank can consider this as they strong in-person component for being a branch bank and it its integration an entire department gets the privileges of remote during the pandemic which can add to the employee satisfaction and relationship developments.


The study has discussed and analyzed the internal and external business environment of the chosen organization, Monzo Bank, in the scene of Covid-19 pandemic. The external analysis was done by PESTLE analysis tool which has indicated various factors that are affecting Monzo’s business performance in post-Covid-19 environment. Also, the internal analysis through SWOT tool has revealed various positive and negative factors that are either harmful or opportunistic for Monzo’s business potential. Overall, the analysis has made a perspective for the readers that how Monzo is thriving in the post-Covis-19 times and what are the factors that are either helping or resisting it to thrive.


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