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Monzo’s boss said the UK digital bank would 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,” Monzo chief executive TS Anil told the FT’s Banking Summit on Thursday.
Monzo’s resurgence has come as fintechs have had to push back against a deepening market, 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 cut 10 percent of its jobs on its way to “short-term profitability.” Last month, payments processor Stripe said it would lay off 14 percent of its workforce — about 1,000 people.
“In the tech space you see a lot of companies that built business models out of free or cheap cash,” Anil said. “We’ve never been one of those companies that has bloated headcount when things are good and panic when things are bad.”
Founded in 2015 and known for its coral pink debit cards, Neobank has faced turmoil for a few years.
In 2020 and 2021, its auditors EY warned of “material uncertainty” over its ability to continue operating as a going concern.
Its results, released in July, showed pre-tax losses widened from £131mn to £119mn for the 12 months to the end of February 2022, while revenue rose 92 per cent to £154.2mn, driven by higher transaction fees as card spending picked up. is managed. Up after epidemic restrictions were eased.
In July, Goldman-backed digital bank Starling became the first UK neobank to announce annual pre-tax profits.
Monzo has faced other challenges in recent years. Last October, it withdrew its US banking license application after being told by regulators that it was unlikely to be approved, and currently has a partnership with US-based Sutton Bank to serve the market.
Anil said the US remains the “next port of call” for expansion, but stressed the lender is focused on maintaining its position in the UK market.
“We chose to double down on the UK and not spread ourselves thin,” he said. “This is a market we are poised to win and geographic expansion will follow.”
Monzo also faces an ongoing investigation by the Financial Conduct Authority into possible breaches of anti-money laundering laws, which it disclosed 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 address the issue.
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