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Finextra
13-07-2025
- Business
- Finextra
Deep Dive: Monzo's Business, Explained: By Sam Boboev
Monzo has emerged as one of fintech's standout success stories – a digital bank that now boasts over 12 million customers and a profitable business model. In an industry where many challengers are still chasing sustainable unit economics, Monzo has redefined what banking can be – and where it's going. Launched in 2015 as a scrappy startup, Monzo set out to 'build a current account that lives on your smartphone and gives you control of your money'. A decade later, it has grown into Britain's largest digital bank and even reached full-year profitability – all while cultivating a devoted user base and an NPS around +70 (versus an industry average of 30). Monzo matters because it exemplifies how a relentless focus on customers can translate into both rapid growth and real revenues. This deep dive examines Monzo's evolution, from its early days and expanding product portfolio to the technology under the hood, its business strategy, international forays, and the financial journey toward profit. Monzo's trajectory offers a blueprint for fintech innovation: prove that 'mission, growth, [and] profit' can go hand in hand. By 'bringing together the best of technology and banking, and remaining customer obsessed,' Monzo has shown it's possible to delight users while building a sustainable bank. Let's explore how Monzo got here and where it's heading next. From Bold Idea to Banking License Monzo's story began in 2015, when a team led by Tom Blomfield founded the company (originally called Mondo) with the aim of creating a branchless, app-based bank. The vision was clear from the start: a bank 'that lives on your smartphone', delivering instant notifications, intuitive budgeting, and a user-friendly experience starkly different from high-street incumbents. Early on, Monzo launched Alpha and Beta prepaid debit cards to test the waters, rapidly gaining a waitlist of enthusiastic early adopters. This grassroots momentum was amplified by record-setting crowdfunding campaigns – in 2016, Monzo raised £1 million in 96 seconds from customers eager to own a part of the bank. By late 2018, Monzo had topped one million users, with 95% of its initial cardholders seamlessly migrating to its new current accounts once those launched. Growth came almost entirely through word of mouth, reflecting a passionate community that Monzo actively nurtured via forums and transparency reports. Regulatory milestones came quickly. Monzo obtained a UK banking license with restrictions in 2016 and, after rigorous testing, had those restrictions lifted in April 2017 – officially becoming 'a fully authorised, unrestricted bank'. This allowed Monzo to transition all customers from prepaid cards to full Monzo current accounts, each with a sort code and FSCS deposit protection. 'Today is a major step towards making [our] mission a reality,' CEO Tom Blomfield wrote at the time, crediting Monzo's community of users for fueling its early success. Throughout 2017–2018, Monzo rolled out core banking features like Monzo me (for easy P2P payments) and Targets (budgeting goals), while maintaining an ethos of openness – Monzo famously shared product roadmaps and engaged users in feedback through its 'Making Monzo' forum. By 2019, Monzo was solidifying its position as a mainstream player. It became the UK's most recommended brand according to YouGov and saw more people switching their primary accounts to Monzo than to any other bank. The bank introduced pioneering app features that competitors would later emulate – Salary Sorter to auto-budget paychecks, Bills Pots to segregate funds for expenses, and Get Paid Early to receive BACS payments a day in advance. All these innovations, alongside the vibrant coral debit card and real-time notifications, helped Monzo build a reputation for making money feel easy. Despite the challenges of 2020's pandemic (when lockdowns briefly dampened card spending), Monzo kept investing in its product. 'As the world shut down, we stayed focused on our customers... delivered new products and invested heavily in key areas of our business,' said TS Anil (who took over as CEO in 2020). That resilience paid off: customer growth remained robust – climbing 23% year-on-year in FY2021 – and engagement deepened even faster. Fast forward to 2023 and Monzo had swelled to around 7½ million personal customers (plus hundreds of thousands of business users) and was ranked as the 7th largest UK bank by customer numbers. It also consistently topped independent surveys for service quality, reflecting the loyalty of its base. Remarkably, 66–90% of Monzo's customer growth came organically via referrals in these years – a testament to its product-market fit and brand love. A typical Monzo user had 30+ friends on Monzo too, underscoring a viral network effect. Monzo's journey from a bold idea in 2015 to a fully licensed, multi-million-user bank within a decade is impressive on its own. But equally notable is how Monzo evolved its product lineup beyond a simple checking account to become a broad financial platform. Evolving the Product Portfolio Monzo's initial offering was a simple app-linked account, but over time it has broadened into a one-stop shop for personal finance. Today, 'Monzo's now a place where you can budget, spend, save, borrow, invest, track your mortgage, insure your contents, and combine your pensions.' This product diversification did not happen overnight – it was a deliberate expansion, year by year, often driven by customer demand and experimentation. Everything still 'starts with our personal current account,' as Monzo likes to say. The personal account (with its bright 'hot coral' debit card) remains Monzo's flagship, offering features like instant spend notifications, fee-free spending abroad, and easy money management. Monzo also provides joint accounts for shared finances, and in 2023 it introduced accounts for 16-17 year-olds, eventually followed by Under 16s accounts in 2025 to help the next generation manage money digitally. On the business side, Monzo launched its business accounts in 2020 after a period of testing. By FY2024, Monzo Business had over 400,000 customers (up from 200k the year prior), ranging from sole traders on free accounts to larger SMEs paying for premium plans. Monzo's business banking has been well-received – for the past two years it's been rated Britain's most recommended business account for overall service quality in independent surveys. To monetize its robust retail base, Monzo rolled out premium account tiers in 2020. Monzo Plus (re-launched in July 2020 after an earlier iteration faltered) and Monzo Premium (launched later in 2020) offer advanced features for monthly fees. Plus (originally £5/month) added perks like custom budgeting categories, interest on balances, and virtual cards, while Premium (at £15/month) tacked on benefits like phone insurance, higher interest, and a metal debit card. These proved popular with Monzo's power users: within the first year, over 134,000 customers signed up for Plus or Premium. By FY2022, Monzo reported 360,000+ combined subscribers across Plus, Premium, and paid business accounts. Subscription uptake contributed meaningfully to revenue – by 2021, 25% of Monzo's revenue was coming from new products (like Plus/Premium and business accounts). Notably, Monzo has continued iterating on its plans. In 2023, it even made some formerly paid features free for all (for instance, releasing its 'most powerful budgeting tools' to the entire user base) to drive engagement, while simultaneously enhancing the paid tiers with new benefits. The result: by FY2025 Monzo had 1 million+ customers on subscription plans, and subscription fee income grew 50% year-on-year. Helping customers grow their money has become a major focus for Monzo. Early on, Monzo pioneered the idea of 'Pots', sub-accounts where users can set aside money for goals. Over 300,000 Pots are created by users each month (as of FY2021-22), underscoring how integral this feature is to Monzo's experience. Initially Pots were just simple piggy-banks, but Monzo soon partnered with third-party banks to offer Savings Pots that paid interest. By 2019 it launched a 'savings marketplace' in-app, letting users open interest-bearing Pots provided by the likes of Investec or OakNorth without leaving Monzo. In February 2023, Monzo took this further by introducing Instant Access Savings powered directly by Monzo. This product, rolled out to both personal and business customers, ensures users benefit from every Bank of England rate increase – Monzo explicitly passes on the majority of base rate rises to savers. The response was tremendous: within a year, more than 1.3 million customers had opened Instant Access Savings Pots, collectively saving £7.7 billion in them. Monzo paid out over £130 million in interest to those customers in the first year alone. This strategy of sharing interest yields helped Monzo deepen trust – it's telling that as of 2025, customers have entrusted Monzo with £16.6 billion in deposits (up 48% from the previous year). Monzo is also dabbling in investments and pensions, making the app even more of a financial hub. In late 2023, Monzo launched Monzo Investments, allowing users to invest in curated funds with as little as £1. The user experience emphasizes guidance and simplicity, aiming to demystify investing for first-timers. Indeed, Monzo found that a third of its investing customers were investing for the first time ever – with women, in particular, embracing this (45% of female investors on Monzo were first-timers). On the pensions side, Monzo introduced a feature to 'combine your pensions' in 2025, likely through a partnership, helping users consolidate old pension pots into one – further embedding Monzo in long-term financial planning. And for homeowners, Monzo added a mortgage tracking tool in 2023 so users can link their existing mortgage and monitor repayment progress in-app. While Monzo doesn't (yet) offer its own mortgage lending, this integration keeps customers engaged and sets the stage for potential future offerings. Like any full-service bank, Monzo provides credit products – but with Monzo twists. It started with overdrafts (introduced around 2018) and later personal loans, offering eligible users quick cash at competitive rates via the app. In September 2021, Monzo unveiled Monzo Flex, a 'buy now, pay later' style credit option allowing users to spread purchases over installments. As Monzo put it, Flex lets you 'pay later for pretty much anything' – unlike other BNPL services limited to certain merchants. Flex was essentially Monzo's take on a credit card, but managed in-app with transparency. It attracted 35,000 customers in short order and later evolved into Monzo's credit card lineup: today Monzo markets 'Flex' as a credit card (with 19% APR variable) and has even launched a 'Flex Build' credit card aimed at helping those with thin credit histories build up their score. For a challenger that once eschewed lending, these credit products have become a key part of the portfolio and revenue mix. Monzo reported that by FY2024, total card spending volume grew 42% year-on-year to £47.8 billion – a clear sign that users are increasingly routing their everyday spending through Monzo's cards, generating interchange fees and interest income on credit balances. Source: Monzo Annual Reports (2021–2025); Monzo Investor and Press Releases; Monzo Blog and Web Pages. Disclaimer: Fintech Wrap Up aggregates publicly available information for informational purposes only. 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Times
03-06-2025
- Business
- Times
Monzo boss plays down IPO rumours after jump in profits
In 2015 Monzo, or Mondo as it was then called, was little more than a twinkle in the eye of its founder Tom Blomfield. Aged 30 at the time, Blomfield could boast just 500 holders of his 'hot coral pink' payment cards and the backing of a single venture capital firm, Passion Capital. His claim at the time, 'We're trying to be the Facebook for banking', sounded ambitious if not downright deluded. But fast-forward ten years and Monzo has come a long way and on a spectacular growth trajectory not so dissimilar to Mark Zuckerberg's. Results on Monday showed customers at the digital bank rising by 2.4 million to more than 12 million in the year to March. Revenues were up by 48 per cent to £1.2 billion. Deposits pushed through the £16 billion mark. Underlying profits grew eightfold to £114 million. Even after including the one-off cost of a scheme to allow staff to cash in share options in December, pre-tax profits were still up a healthy fourfold to £60.5 million. London-based Monzo claims to be Britain's seventh largest bank by customer numbers and the nation's biggest digital bank. It is also far more popular with customers than most of its incumbent branch-based rivals: the latest independent study by the Competition and Markets Authority scored it second for overall service quality, beating every other bank except Chase. Blomfield is long gone, having left in 2021 to farm alpacas and launch other ventures, but his successor TS Anil hailed the latest results as the product of 'bringing the best in tech together with the best in banking'. The standout growth engine last year was business banking, which grew its customer base by 49 per cent to 625,000 small business clients. One in six new business start-ups in the UK were now banking with Monzo, Anil said. Monzo is much more than the banking app with clever tools that helped customers to budget and share bills, which in the early days became the coolest way of paying, for millennials and Gen Zs. It has expanded into personal loans, contents insurance and even pensions in a joint venture with BlackRock. It has launched in the United States and is preparing a foray into the European Union, via Ireland. Not everything is going well. Like most other retail banks, Monzo reported a slimming in its net interest margin — the difference between deposit rates and lending rates — from 4.41 per cent to 4.09 per cent. Margins have been falling in the wake of base rate cuts. But Anil played down the hit, saying Monzo's success was built on volume growth and that it had other income streams including subscription services such as Monzo Perks, where customers pay a £7-a-month fee in return for benefits including railcards and free sausage rolls at Greggs. About 900,000 Monzo customers pay for subscription services. Another blemish in the latest results was the disclosure of possible failings in its anti-money laundering controls. An investigation by the Financial Conduct Authority was now 'at an advanced stage' and was 'likely to have a financial cost to Monzo', it disclosed. A flotation now sounds some way off. 'Honestly, an IPO is not something we're focused on right now,' Anil said. 'We're oriented entirely around scaling the business and taking it to greater heights.' Speculation that Monzo was heading for an imminent public listing had intensified after Morgan Stanley was used to introduce it to potential investors and it started recruiting to build an in-house investor relations team. Last month Emma Reynolds, the economic secretary to the Treasury, met Monzo executives to press the case for a London float. Anil, however, played down the IPO option on Monday, while adding, 'We believe it [Monzo] would make a great public company one day.' There is no urgency. Last year Monzo raised £500 million from institutional investors and is now capital-accretive. Its backers include Alphabet, the owner of Google, and Tencent, the Chinese video games and social media company. It also has a fan club of early users who bought shares through crowdfunding platforms. A secondary share sale in December, enabling staff to cash in share options, valued the company at £4.5 billion, it has said. Putting that claim to the test through a flotation is, it seems, still some way off. Rise of the Monzonauts Monzo and its 2,500 employees, whom it dubs Monzonauts, have been on an epic journey over the past ten years. With an £18 billion balance sheet and a £4.5 billion valuation (by its own measure), the company is no longer a tiddler in any sense. Through the offering of helpful and imaginative app-based budgeting and spending tools, it has won over millions of loyal customers. It has started to cross-sell them other services, whether mortgage-broking or pension-finding or contents insurance. It has also managed to bulldoze its way into small business banking, catering not just to sole traders but in some cases to companies with dozens of staff, and grabbing market share from the incumbent banks. It has already shown itself capable of persuading consumers to make it their main bank, into which at least half their salaries are paid. Primary account holders account for 33 per cent of the total and it is growing. There are, however, three tests still to come before Monzo can be said to have fully come of age. The first is finding a home for all those deposits, most of which get parked at the Bank of England. Monzo needs to get more fully into the lending business, though its caution till now suits its capital-light model. The second is exporting the formula overseas. Monzo is for now still tiny in the US and only just thinking about the EU, though it has established an office in Dublin. There's no guarantee the Monzo product will travel, though there is plenty of room for growth still in the UK, of course. The third is the test of a full-blooded recession. The 2020/21 downturn was hugely softened by government support for households and business. Monzo's credit-scoring techniques, and the potential for a blowout in borrower defaults, have yet to be assessed. In their first decade the Monzonauts have proved themselves creative and painstaking innovators but they have not yet been fully tested.
TechCrunch
20-05-2025
- Business
- TechCrunch
Monzo's pivot from cool to corporate: ‘freshness is not about gimmicks'
Monzo, Britain's biggest digital bank, is still synonymous with its neon debit cards, extensive use of emojis, and free spending abroad. But it's no longer just trying to be cool; it's trying to become a major financial institution. That shift, from an upstart fintech beloved by millennials into a mature, sustainable business, is what makes this year a likely turning point. In a sit-down with this editor last week, despite signs that Monzo is preparing to go public – along with new reports that something is in the works – Monzo CEO TS Anil wouldn't confirm that Monzo is listing this year. He suggested the building blocks are in place, though: profitability, product breadth, and just the right amount of AI. The numbers help tell the story. Monzo posted its first annual profit last year. In its 2024 annual report, it claimed 9.3 million personal account holders and more than 400,000 business customers. It's also no longer reliant on interchange fees and overdrafts; lending, subscriptions, and business banking are now meaningful revenue streams. All this comes after a period marked by regulatory scrutiny and leadership turnover, developments that forced the company to grow up fast. Under Anil — a banking veteran who joined Monzo in 2020 and soon after took over as CEO from co-founder Tom Blomfield — Monzo is still flashy. Those hot coral cards remain a must for many younger banking customers. It has also become more disciplined about its growing product lineup. Monzo's customers can now invest in mutual funds powered by BlackRock, for example, and track their existing mortgages from other lenders in their Monzo app. They can also use Monzo in the U.S., though most Americans have yet to hear of the brand. The question is whether that's a problem, considering Monzo started amassing beta customers in the country six years ago. Certainly, it seemed fair to ask if Monzo needs to penetrate the U.S. market to become the global powerhouse that Anil is envisioning. During our sit-down, Anil insisted that's not the case. He said that one in five adults in the UK now banks with Monzo – in other words, there is market share Monzo has left to gain in its own backyard. (According to Anil, Monzo added 300,000 new users in April alone.) When questioned about U.S. expansion and the competitive landscape, Anil downplayed the challenge. 'I think there are a few universal truths that apply,' he said. 'Most people feel anxiety about their money, and that anxiety is independent of affluence . . . The second thing that holds true is that the incumbent industry has been built off of arbitraging customers and leveraging, in some fashion, customers' ignorance. Those are the insights that are helping us create the best features that would make sense in the U.S.; that's the way we intend to double down.' Techcrunch event Join us at TechCrunch Sessions: AI Secure your spot for our leading AI industry event with speakers from OpenAI, Anthropic, and Cohere. For a limited time, tickets are just $292 for an entire day of expert talks, workshops, and potent networking. Exhibit at TechCrunch Sessions: AI Secure your spot at TC Sessions: AI and show 1,200+ decision-makers what you've built — without the big spend. Available through May 9 or while tables last. Berkeley, CA | REGISTER NOW During our talk, we also discussed whether Monzo could itself be construed as a legacy player in the not-too-distant future. After all, the company is now 10 years old, and AI is changing everything. We wanted to know whether Monzo worries about the rise of AI-native banks. 'Gosh no, we're not a legacy player,' Anil said. 'We continue to operate at the bleeding edge of technology.' What would worry him, he continued, is if he 'saw signs of complacency in terms of adopting new technology, or at least a curiosity about it. Those would be like bright, flashing red warning signs for me, but that's the opposite of the company that we are.' As for the IPO that's reportedly in the works, said Anil: 'To tell someone in the media 'don't believe everything you read in the media' is kind of like a dicey move to make, but yeah, please don't believe everything you read in the press. We will be a great public company one day. We haven't decided either when or where, let alone with whom.' If you're curious to learn more, including about how Monzo keeps its marketing fresh, how it's using AI, and the ways its engineers handle the adoption of new tech, watch our full chat below.
CBC
11-05-2025
- Entertainment
- CBC
'Vibe coding' makes designing apps easier than before — but it comes with risks
Cyanide ice cream. Cholera-inspired chocolate cake. A recipe featuring so-called ingredients the CBC's Language Guide discourages from repeating verbatim. These can all be found on a website created by U.S.-based tech entrepreneur Tom Blomfield that uses artificial intelligence to generate recipes after a user suggests a list of ingredients. "Some more mischievous users started to push the envelope on what kind of recipes his AI-powered site would generate. And they found that it would generate things that they thought were funny but are potentially dangerous," Emanuel Maiberg, a reporter for the tech website 404, told The Current host Matt Galloway. Blomfield built with a new method recently dubbed "vibe coding," where people use AI tools to build a program, app or game with prompts or suggestions much like how one would use ChatGPT to generate a written text answer. But the example calls attention to how building apps solely by "vibe" may lead to problematic, and even potentially dangerous results. Since Maiberg's story was published on April 2, the cyanide ice cream article has been removed from archive, but others including the cholera cake remain. CBC reached out to Blomfield for comment, but did not receive a reply. Vibe coding was coined by Andrej Karpathy, a Canadian computer scientist and co-founder of artificial intelligence giant OpenAI, in a 2023 post on X. "There's a new kind of coding I call 'vibe coding,' where you fully give in to the vibes, embrace exponentials, and forget that the code even exists," Karpathy wrote, as though describing something more akin to a meditation session than developing a computer program. Vibe coding has become possible recently, experts say, because AI tools have become sophisticated enough to build functional — or mostly functional — apps with little more than general prompts or suggestions. "The difference between last year and now is that large language models — LLMs — have gotten good enough that they can actually produce, you know, medium-scale games or apps, things like that. It actually works," said Michael Guerzhoy, an assistant professor teaching programming and machine intelligence at the University of Toronto. The process has opened doors for budding app makers like Chioma Janelle Efejedia, a psychotherapist and social worker based in Kitchener, Ont. Not knowing how to code, she might have had to pay a programmer thousands of dollars to make a mental health app. Instead, she vibe-coded her own app called OMA Life, which offers guided mindfulness in various languages including Ibo, Yoruba, and Urdu, culturally relatable relaxation sounds, and access to a directory of therapists. "I just think, you know, where tech is right now gives a great opportunity to say, OK, I can meet this need," Efejedia told CBC Radio's Manjula Selvarajah. 'Build something really cool' Tobin South, a researcher in AI security at the Massachusetts Institute of Technology, says he's excited by vibe coding's "ability to unlock your everyday person to build something really cool." "I went to a party the other day and someone wanted a really cool app to organize the party. And so I made a little app with bingo cards inside of it, and a party agenda. And I was able to just bring this into existence with the English language rather than typing any code," he said. But he also cautions that it can create "massive security risks" when they aren't written and checked by experts in the field. "If you're starting to build personal finance tools or other tools to augment your life, these things can get really tricky. You do not want your bank details leaked all over the internet because you vibe coded," he said as an example to Galloway. He likened traditional app building as something made out of Lego bricks by trained experts, brick by brick, drawing on the work and experience of previous versions and notes from their creators. Vibe coding, meanwhile, is sort of like dumping your hand blindly into a box of bricks and making something out of whatever you've clawed out. "Sometimes ... this leads to a Lego construction, a Lego house that might fall down, that's missing some essential bricks that hold it all together," he said. 'Unexpected, dangerous results' Someone vibe coding on their own won't benefit from the institutional knowledge of working in a tech corporation, either. "If you work at Google, there's already someone breathing down your neck about security and making sure everything's done the right way," South said. In other words, if you make a recipe app without vibe coding, there's almost certainly someone on your team making sure that if someone asks for a recipe with cyanide, it won't actually go ahead and make one. In late 2024, Google CEO Sundar Pichai said that 25 per cent of all new code for the company's products were made with AI, though under the supervision of human employees. Maiberg cautions that as more programmers — not just amateurs or hobbyists like Efejedia — use AI to build their code and programs, more lines of code that have never been checked by a human may creep into our collective technological backdrop. That could mean errors might never be found until the consequences rear their ugly head -- from a rude ice cream recipe, to easily hackable personal banking info to something worse we may have yet to predict. "I think my concern, and the concern of other people, is that we can get unexpected, dangerous results from having so much code written by AI in a way that we don't fully understand," Maiberg said.
Business Insider
28-04-2025
- Business Insider
Monzo's former CEO shares 3 tips for getting the most out of vibe coding
Vibe coding is enabling nontechnical users to write code with AI. Former Monzo CEO Tom Blomfield shared tips on how to get the most out of vibe coding. They include experimenting with different tools and keeping a log in case you need to reset to a clean code base. Vibe coding continues to gain traction in Silicon Valley, and former Monzo CEO Tom Blomfield has thoughts on how to maximize its potential. Coined just two months ago by Andrej Karpathy, an OpenAI cofounder, the term refers to people using AI to write code by giving it text-based instructions. Experienced engineers are using it to save time, and those with nontechnical backgrounds are coding everything from dating apps to games. Blomfield, who's now a group partner at Y Combinator, shared some tips for people looking to optimize the way they vibe code, in a video posted by the accelerator on Friday. Here are three pieces of advice he gave. Pick the right tool and create a comprehensive plan Blomfield advised users to plan ahead and experiment to find the tool that best supports their skill level and desired end product. He found that tools like Lovable and Replit were suited for beginners, whereas more experienced coders could use Windsurf or Cursor. "Work with the LLM to create a comprehensive plan," he said in the video, referring to large language models. "Put that in a markdown file inside your project folder and keep referring back to it." He suggested that users could use the LLM to carry out the plan section by section, instead of making the product in one go. "This advice could change in one or two months, as the models are getting better," he added. Do version tests on the product Blomfield said that when he prompted AI tools multiple times for the same coding task, he would get bad results as a result of the model accumulating "layers of bad code." He advised using the large language model to write tests that simulate someone clicking through a version of the site or app, to gauge how well the features are working. Sometimes, LLMs can make unnecessary changes to these features, he said, and implementing integration tests can pick up on these changes quicker. Write instructions for the LLMs Blomfield said he found that different models succeeded where others failed. If a user encounters a specific bug, it's helpful to reset all changes and give the LLM detailed instructions to fix it on a clean code base. "Logging is your friend," Blomfield said. Another tip he offered was to use small files and a more modular, service-based architecture, where the LLM has clear API boundaries. An upside of this is that it would avoid creating a huge single repository of code for various projects, which could be more complex to manage and have more integration challenges.
