Monzo CEO promises to scale up the business despite fintech turmoil

The head of the British digital bank Monzo has promised to go ahead with scaling up the business, defying the cuts that are forced on many fintechs by slowing economic growth and a downturn in the markets.

CEO TS Anil said his plan to continue investing and developing new products had the support of shareholders, who plowed $ 500 million into the bank in a fundraiser late last year that led to Monzo’s valuation more than doubling to 4.5 billion dollars.

“For every question I get about profitability, I get many times as many from investors and others who ask if we are investing wisely in the long run,” Anil said in an interview with the Financial Times. “It is incredibly important to us that we build Monzo not only for today, but for the great global ambition we have.”

Monzo’s promise to focus on long – term growth comes at a time of discipline for a fintech sector that took off during the era of simple money, rising stock markets and patient investors.

As a sign of how much sentiment has waned, Klarna, once Europe’s most valuable private technology company, cut its price tag from $ 46 billion to $ 6.7 billion in a fundraiser last week, saying it would focus on “short-term” profitability “.

Anil said he expected Monzo, which was founded in 2015 and is best known for its coral pink cards, to go into balance sometime next year, adding that profitability could be achieved earlier if that was the bank’s only goal. The bank has no current plans to raise money this year, he said.

Monzo’s pre – tax loss for the 12 months to the end of February was reduced to £ 119 million from £ 131 million in the previous financial year, according to the bank’s latest accounts published in its annual report on Thursday.

A 38 per cent increase in wage costs to £ 130.2 million was the biggest strain on the bottom line, as Monzo employed more than 500 people, bringing the workforce to almost 1,900.

The accounts were also the first since 2019 where the auditors EY did not warn of a “significant uncertainty” about Monzo’s ability to continue operating.

While Monzo’s pre – tax losses declined somewhat, the bank’s revenue rose 92 per cent to £ 154.2 million, driven by transaction fees as customers spent more on their cards. The bank’s largely British customer base jumped a fifth to 5.8 million.

Lending to customers more than doubled to 259 million pounds, including through Monzo Flex, the version of buy now, pay later model.

As the British economy slows down and consumers experience a squeezed income, Anil said he had not seen evidence that customers are struggling to repay loans, but that the bank remained vigilant.

“We have been incredibly responsible when it comes to our lending business – we look at affordability, from both the client’s and Monzo’s perspectives,” he said, adding that they had teams for financially vulnerable users and offered budget tools.

Anil said the bank hoped to launch a retail investment platform “in the near future” and that it would be carefully designed to “help them make good decisions”, but that cryptocurrencies are not part of the current plan.

Rival fintech Revolut launched a similar platform in 2019 and has been offering cryptocurrency trading since 2017.

Monzo has faced several regulatory setbacks. The bank said an investigation by the Financial Conduct Authority into potential violations of anti-money laundering laws, which it revealed last year, was ongoing.

This year, the regulator raised concerns about the adequacy of the challenger banks’ defenses against economic crime, following a “significant” increase in suspicious activity reports.

Anil said that it was too early to talk about a timeline for a stock exchange listing or in which market it could finally try to list.