Monzo, Starling and Tandem all expect to have hit profitability by 2020 or sooner.
To hear the sceptics tell it, the UK’s app banks are a hundred years from profitability – but the banks themselves are considerably more optimistic.
At a recent Expert Access roundtable event, hosted by the investment bank Liberum, bosses from three of the UK’s premier digital banks shared their own profit-making timeframes. Not one of them expects to be losing money beyond 2020.
“As you know we have a whole host of services we provide, such as our Starling payment services, our current account and our business account. So we are already working very hard on that revenue stream.”
“So our current financial models I think are putting us reaching cash-flow positive in 2020, but we’re working really hard to bring costs down and drive revenue to get to cash-flow positive some time in 2019,” he said. “We’ve just hit contribution margin positive on our newest cohort in the last couple of weeks, so we’re well on our way.”
Not to be outdone, Tandem founder and CEO Ricky Knox is targeting profitability next year.
“So on our current forecasts we’ll be profitable next year, but actually depending on how quickly we choose to accelerate, we may choose to push out profitability,” he said.
All four of the digital banks have raised significant amounts of venture capital to fuel their operations to date. According to Crunchbase, Revolut, Starling, Monzo and Tandem have raised $336.4m, $190.3m, $146.42m and $145.2m respectively.