Monzo, a UK neobank with approximately 13 million users worldwide, has reportedly been considering resubmitting an application for a US banking license. This move would represent a significant shift in the company’s strategy, aiming to establish a stronger presence in what is considered the largest banking market globally.
Four years ago, Monzo had initially applied for this license but withdrew its submission following indications from the Office of the Comptroller of the Currency (OCC) that approval was unlikely. The withdrawal came at a time when Monzo experienced a steep decline in its valuation due to the pandemic and faced questions over potential anti-money laundering rule breaches.
Monzo’s Shift in Focus
In response, Monzo redirected its efforts towards the UK market, where it reported notable financial performance. The company saw a 48% increase in revenue to GBP 1.2 billion for the year ending March, accompanied by pre-tax profits of GBP 60.5 million, as per reports from the Financial Times.
Favorable Regulatory Conditions
Recently, regulatory conditions in the US have improved, potentially making it more appealing for fintechs like Monzo to pursue licensing opportunities. Federal banking agencies, including the OCC and the Federal Deposit Insurance Corporation (FDIC), have introduced changes that have simplified processes previously associated with obtaining licenses or engaging in partnerships.
Monzo’s renewed interest could place it alongside other fintech firms expanding into the US market. For instance, Checkout.com has already obtained a limited-purpose bank charter from Georgia, allowing direct settlement processing for retailers. Similarly, Brazilian fintech Nubank is pursuing a national bank charter, while UK-based competitors Revolut and Starling have explored acquiring existing American banks to facilitate nationwide lending operations.
Currently, Monzo operates in the US through partnerships with other financial institutions. However, company representatives did not comment on the possibility of resubmitting its application for a banking license.
