Digital bank Monzo's losses more than quadruple

Digital bank Monzo's losses more than quadruple

Digital challenger bank Monzo has seen its losses more than quadruple in its first year with a full banking licence.

Losses for the year to the end of February 2018 were £33m, compared with £7.9m for the same period until February 2017.

The bank, which is based entirely around a mobile app, had £71.2m in deposits which, with 750,000 customers using its current accounts, meant there was an average of just £95 in each account.

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Monzo has said its ambition is to become a "financial hub" which its customers can use to control all their money.

The increase in losses has been attributed to an increase in Monzo's operating costs as a result of the investment needed to become a fully operational bank.

Tom Blomfield, chief executive of Monzo, said: "In the next few months we’ll keep improving our unit economics: the money we lose or make on each current account. Our goal is to break even on each new customer very soon, then reach overall profitability as a business in the future.

"To work towards profitability, we’ll do two things. First, we’ll work to lower the cost of providing customer support, while making sure the service stays world-class. We’ll do that by helping our staff work more effectively with better tools and automation.

"We'll also work to generate revenue through lending. We started making overdrafts available in January, and around 37,000 people have now enabled them. Over the next few months, we will build new features that let people borrow in ways that are convenient, transparent and affordable."

Monzo is one of several digital-only challenger banks which have launched in the UK in recent years.

Atom Bank, another digital challenger which is backed by Neil Woodford, got its banking licence in 2015 and moved into the mortgage market in 2016.