Monzo’s CEO takes 100% pay cut for 12 months
Monzo’s co-founder and CEO Tom Blomfield has cut his salary to zero for the next 12 months as the digital bank grapples with the impact of coronavirus on its business.
In an internal memo seen by TechCrunch, the 1,500-person company was told that its senior management team and board have also volunteered to take a lesser 25% pay cut.
The challenger bank has also offered a voluntary two-month furlough, or leave, to a “limited number” of its UK staff, supported by the country’s coronavirus aid package which ensures employees still get paid and have a job to come back to after the lockdown.
According to TechCrunch’s report, Monzo is accepting up to 175 furlough applications in customer support, and up to 120 applications from all its other business divisions.
The bank’s chief technology officer (CTO) Meri Williams has decided to leave Monzo entirely, saying that she wanted to voluntarily help with cost-cutting measures.
Many technology start-ups have so far struggled to get access to the UK government’s £330 billion loan scheme, largely because their unprofitability means they cannot be classed as “viable” businesses.
Though still unprofitable, Monzo is well capitalised. The $2.4 billion-valued bank is currently understood to be in talks with SoftBank over a $100 million funding round, as reported by the Telegraph in January.
But with the pandemic already seeing various technology companies’ capital raising hit by dropout investors, Monzo’s 2020 funding round could face similar challenges.
Last week, US-based Moven was forced to close all its customers’ money management accounts after its long-term committed funding pipeline took several hits due to the “uncertainty around coronavirus”.
“Like every neobank in the world right now we were reliant on funding to continue growth,” Moven’s founder Brett King said.
And as capital raising takes a hard hit, digital banks like Monzo are also seeing declines in their revenue from interchange fees as customers spend less on travel and more on domestic consumer goods.
But some challengers have insisted that these declines in revenue are in no way “dramatic”. N26’s general manager of Germany, Austria and Switzerland Georg Hauer told FinTech Futures last week that it had not “seen a massive dip in business in any of [its] markets”.
Digital banks are also still fighting the battle of trust. Amid the coronavirus chaos, Monzo and Revolut were forced to combat – what later emerged to be “fake news” – rumours which suggested both had gone bust and that Monzo specifically had stopped paying staff.
Blomfield personally responded to the Twitter storm, affirming: “Monzo is not going bust. Source: I am the CEO.”
As the negative economic impacts of coronavirus continue to unfurl, Monzo will likely have to revise its self-set January target of hiring a further 500 people this year.
Fellow UK challenger Starling tells TechCrunch it has been forced to put 41 staff on furlough, most of which are new hires or colleagues who cannot work from home.
Starling’s CEO Anne Boden added: “Starling is well-funded, our TV ad campaign is doing extremely well and we are still growing fast, adding new business and personal customers every day. It’s business as usual and no-one is taking a pay cut.”
Revolut has said it has no plans to furlough any workers at this point in time.