Digital challenger bank Monzo has seen its pre-tax losses leap to £33.1m for the year ending 28 February 2018. The numbers represent a four-fold increase from the previous year where losses were £7.9m. That, however, belies a tripling of its user base alongside growth in its income as the firm begins to double-down on boosting revenues and target future profitability.
“Monzo makes money work for everyone” is the challenger bank’s new tagline. And it is certainly growing its reach beyond savvy fintech enthusiasts.
The bank, which has 7,300 crowdfunding investors has more than trebled its customer base in the past 12 months. It now has more than 750,000 customers who’ve spent more than £2bn through Monzo, the firm says.
CEO Tom Blomfield predicts the digital bank will have “several million” customers by the end of 2019. It made overdrafts available to all eligible customers in April 2018, and around 37,000 people have opted for one providing an important new revenue channel. Its net operating income for the year came in at £1.8m, a more than tenfold increase from last year.
In September 2017 Monzo converted its customers from its prepaid card programme to regular current accounts which netted a hit rate of 94 per cent and, the bank says, reduced the cost to run each active account by close to 80 per cent.
The new current accounts run on technology built entirely by the team at Monzo, so the bank no longer pays a third party to process payments.
“The current account also means people add money to their account by using bank transfers, standing orders or getting their salaries paid in, rather than topping up with a debit card which the bank pays a third party to process.” Monzo said in a release.
Monzo, which was founded in February 2015, received its full banking licence in April 2017, says it is eying a short-term goal to break-even per customer, “before working towards overall profitability in the future”. The bank now has a team of more than 300 people.
Blomfield said: “More than 750,000 people now choose to bank with Monzo, and when they do they put their trust in us…In the last year we’ve made real progress towards building a sustainable business, and I’m looking forward to the year ahead when we’ll be able to bring Monzo to millions of people, and help them use Monzo together.”
With more than 60,000 people opening new Monzo accounts each month and 80 per cent of that growth coming through word of mouth and referrals, Monzo is planning on growing engagment through adding product features with "network effects", it says.