Monzo set to hire another 500 and reintroduce paid accounts
Monzo is gearing up to meet its forecast of 5.5 million customers by the end of this year. The UK challenger is planning to hire 500 employees and, in a bid to turnover a profit, its CEO Tom Bloomfield tells Reuters it is set to reintroduce paid account plans this quarter.
Valued at around £2 billion pending an imminent £100 million funding round with SoftBank and sitting on some 3.8 million customers, the challenger is in prime position to amp up its efforts and transport its business to profitability.
The relaunch of its paid plan comes after an initial project which saw £6 per month Monzo Plus pulled last September just five months after it was introduced in April 2019. The bank said it wanted to offer paying customers more fee-free spending abroad and travel insurance, but the fintech later admitted “for a number of reasons, things just haven’t gone the way they should have with Monzo Plus”.
“We learned that things that seem a universal truth when you are 50 people, launching iteratively as no one is paying attention, when you do that with 3.5 million customers it’s foolish,” Bloomfield now tells Reuters.
The neobank has also been the subject of a wave of complaints regarding account freezing. BBC Watchdog Live investigated the issue last year, finding that it was getting more complaints regarding Monzo than any other bank over account freezing in the three months it conducted the report. Some customers waited weeks to get access to their accounts again.
Industry experts have speculated that the bank, which freezes accounts if they could be in violation of anti-money laundering (AML) regulations, is struggling to run its compliance procedures in line with its exponential growth.
With a £47.2 million loss in 2018, Monzo is still a significant way from profitability. But fellow UK challengers are chomping at the bit to be the first to reach it. Starling Bank raised £60 million a week ago, and Revolut has now been valued at $5 billion ahead of a $500 million fundraising with SoftBank.
Starling has 1.25 million customers and the smallest pre-tax 2018 loss of £26.8 million, planning to break even at the end of year, whilst Revolut’s losses doubled to £33 million in 2018.
“Our real focus is on monetisation,” says Monzo’s CEO. “We’re looking to drive revenue and do it in a way that’s transparent and fair.” Bloomfield says the challenger is also looking into lending more as a revenue driver. Currently lending just £120 million, it holds £2 billion in deposits.
On the bank’s planned US expansion, Bloomfield says he’s learnt from failed foreign expansion attempts by fellow challengers – most recently N26’s abandonment of the UK last week over what it reasoned was Brexit complications. Despite not releasing its UK user count, much of the industry believe the German challenger’s move was down to a lack of users.
“In the US we are laying the groundwork, but not looking for explosive growth,” he says. “The lesson there is if you take a product and just move it across unchanged it doesn’t do well – N26 didn’t connect”.
Bloomfield re-iterates that Monzo will not be selling out to a big incumbent bank any time soon. “We’ve been rude enough about them in the past that they’ve stopped trying,” he says.