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Monzo | Neo-Bank Strategy Deep Dive

November 9, 2020

Monzo | Neo-Bank Strategy Deep Dive

Flaunting some snazzy coral cards, with upwards of 4M users & millions in funding, Monzo has been in the limelight since 2015.

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Flaunting some snazzy coral cards, with upwards of 4M users & millions in funding, Monzo has been in the limelight since 2015. ‍

While its product & geographic expansion strategies do show potential, Monzo has yet to emerge with a positive bottom line.

Loans & advances make up for less than 10% of its deposit base – a big opportunity missed in terms of earning interest income. However, advances have increased 8x Y-o-Y, a good indicator.

The company reports positive contribution margins of £4 per customer in 2019, but its operating expenses are 4x of net operating income for the current year.

Impact of COVID-19 on interchange income from transactions (leading contributor to revenue) will be severe. In proportion, interest income is 25% lesser than interchange income.

2 new paid products – Monzo Plus & Business Accounts have scope to build sustainable revenue sources, however, lending remains its best bet.

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