Spike of Monzo’s popularity brings it to 7.9 million pound losses

5 July 2017

monzoMonzo, a mobile only startup bank, reported losses in view of incommensurable growth of its popularity and announced it plans to bring its customers from prepaid card service responsible for major part of its losses, to an upcoming current account. The company suffered a pre-tax annual loss in the amount of £7.9 million, while experiencing a 5% weekly increase in the number of customers and 7% raise in the volumes of transactions since the beginning of the year, according to Tom Blomfield, CEO of Monzo.

Blomfield continues adding that if the company keeps pace of its growth it is going to reach about 500,000 to 800,000 accounts by the year end. Thus, to be able to offer appropriate support to its customers, Monzo will have to significantly enlarge its personnel within the following half-year period.

Counterintuitive it may be, but the growth has played a low-down trick with Monzo, bringing it to the line of £7.9 million losses for the reporting period ended February 2017, up from £1.6 million reported in the same period a year ago. Other losses included costs of support and international ATM use, which accounted for 40% of Monzo’s losses.

Blomfield notes that the economics of the company will dramatically improve after the bank moves its customers to the current account, while its prepaid offering has resulted in about £50 per active customer per year, and moving customers to the current account is expected to substantially cut this amount.

According to Blomfield, at the moment the number of its existing active current accounts makes up in the vicinity of 50, used by its employees within the framework of the pilot test before going public later this summer. Besides, Monzo will be looking to add lending capability to its service package, Blomfield adds.

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