Neobank Competitors Cross The Atlantic

Smartphone-only bank makes a splash in the US.

Monzo, the smartphone-only neobank that rapidly garnered more than a million customers in the UK, is reportedly entering the US market. The fintech has assembled a team to prepare for its US launch, initially with a “lite” version of its UK product in partnership with a US bank, until Monzo can secure its own federal banking license, according to the website TechCrunch.

The brazen startup grew rapidly in the UK, raising £85 million ($108.8 million) last October in a Series E funding round led by US venture capital firms General Catalyst and Accel, propelling it to a “unicorn” valuation. That was followed by £20 million in crowdfunding in December, but it is only now making tentative progress toward profitability.

The company has yet to reveal details of its planned US offerings but is likely to include many features that have engaged its young UK customer base, such as in-app sign-up, debit cards, payments accounts, ATM withdrawals and real-time transaction notifications. Still, analysts say Monzo must carve out a niche. “Attacking the US market could be a smart move—estimates suggest the US accounts for 60% of fintechs globally,” says Simon Healy, EMEA industry director for Unisys Financial Services. “Monzo needs to ensure it has the differentiation to drive its business.”

Monzo faces plenty of competition in the US, such as investment banking leviathan Goldman Sachs’ foray into online retail banking, Marcus. In just over two years Marcus has attracted more than 2 million US customers. It made its UK debut last September. Still, Monzo has a different business model, says Peter Matthews, CEO of consultancy Nucleus, and is “so far not wedded to taking customer deposits to fund [its] loan book, whilst Marcus is more traditional.”