Monzo chief says UK digital bank will turn a profit in 2023

1 min


155
94 shares, 155 points

The boss of Monzo said the UK digital bank will be profitable in 2023, marking a turnaround from 2021 when its auditors flagged “material uncertainties” over its ability to remain in business.

“We will be profitable in the next financial year,” TS Anil, chief executive of Monzo, told the FT’s banking summit on Thursday.

Monzo’s resurgence comes as fintechs have had to retrench in the face of a deepening market rout, with many taking drastic cost-cutting measures to reach short-term profitability.

Klarna, once Europe’s most valuable private technology company, has had its valuation slashed and said in May it would be cutting 10 per cent of jobs in a pivot towards “short-term profitability”. Last month, payments processor Stripe said it would be laying off 14 per cent of its workforce — approximately 1,000 people.

“In the tech space you saw a lot of companies who built business models out of free or cheap cash,” said Anil. “We’ve never been one of those companies who have a bloated headcount when things are good and panic when things get worse.”

The neobank, founded in 2015 and best known for its coral pink debit cards, has faced a tumultuous few years.

In 2020 and 2021, its auditors EY warned of a “material uncertainty” over its ability to continue to operate as a going concern.

Its results released in July showed that pre-tax losses for the 12 months to the end of February 2022 narrowed slightly from £131mn to £119mn, while revenues surged 92 per cent to £154.2mn, driven by higher transaction fees as card spending picked up after pandemic restrictions eased.

In July, Goldman-backed digital bank Starling became the first of the UK’s neobanks to announce an annual pre-tax profit.

Monzo has faced other challenges in recent years. Last October, it withdrew its US banking licence application after it was told by regulators it was unlikely to be approved, and currently has a partnership with US-based Sutton Bank to serve the market.

Anil said the US remained “the next port of call” for expansion, but emphasised that the lender was focused on maintaining its position in the UK market.

“We’ve chosen to double down on the UK and not spread ourselves thin,” he said. “This is a market we’re poised to win in and a geographic expansion will come on the back of that.”

Monzo also has to face an continuing probe by the Financial Conduct Authority into potential breaches of anti-money laundering laws, which it revealed last year.

Anil would not comment on the investigation but said financial crime was an “industry challenge,” adding that other sectors such as digital platforms, such as social media companies, also needed to tackle the issue.

Source: Financial Times


Like it? Share with your friends!

155
94 shares, 155 points

What's Your Reaction?

Cute Cute
5
Cute
Fun Fun
24
Fun
Hate Hate
18
Hate
Confused Confused
8
Confused
Fail Fail
26
Fail
Geeky Geeky
21
Geeky
Love Love
13
Love
OMG OMG
8
OMG
Choose A Format
Personality quiz
Series of questions that intends to reveal something about the personality
Trivia quiz
Series of questions with right and wrong answers that intends to check knowledge
Poll
Voting to make decisions or determine opinions
Story
Formatted Text with Embeds and Visuals
List
The Classic Internet Listicles
Countdown
The Classic Internet Countdowns
Open List
Submit your own item and vote up for the best submission
Ranked List
Upvote or downvote to decide the best list item
Meme
Upload your own images to make custom memes
Video
Youtube, Vimeo or Vine Embeds
Audio
Soundcloud or Mixcloud Embeds
Image
Photo or GIF
Gif
GIF format