Monzo to follow Revolut and Klarna with launch of mobile service
Monzo has become the latest fintech darling to expand its lifestyle reach with the firm exploring the development of mobile phone services.
The London-based firm is looking to offer a Monzo-branded service to its over 12 million in account holders.
The service would follow rival Revolut issuing plans in April to enter the mobile market and buy now, pay later giant Klarna launching its US phone plan in June.
A Monzo spokesperson said: “Monzo is known for transforming products – and an entire industry – to deliver a great experience for customers.”
“So when we heard from our customers that mobile contracts can be a pain point, we set out to explore how we could do this the Monzo way.”
Fintechs battle to diversify
Monzo’s fresh plans, first reported by Financial Times, come as UK fintechs strive to diversify their revenue streams amid a backdrop of falling interest rates. The Bank of England slashed rates to four per cent this month, down from an post-financial crisis high of 5.25 per cent last August.
Interest income at Monzo soared over £500m in the space of two years on the back of sky-high interest rates.
But while rates are not expected to drop to pre-2022 sights, the gradual decline is set to take a chunk out of the firm’s bottom line.
The digital bank said last year that every 100 basis point shift in rates impacts annual interest income by £34m – the equivalent to eight per cent for the period ending March 2024.
Monzo’s revenue increased 48 per cent to £1.2bn in the last year, as customer deposits swelled nearly 50 per cent to £16.6bn.
In July, the neobank was slapped with a £21m fine by the Financial Conduct Authority after “repeatedly” opening accounts for “high-risk” customers. This included onboarding customers using well-known landmarks such as Buckingham Palace and 10 Downing Street.
Chief executive TS Anail said such issues had been “resolved and are firmly in the past”.