A detailed analysis of UK challenger bank Monzo

1. DEEP DIVE
o Overview
o Executive Team
o Product Stack
o Customer Acquisition
o Community Banking
o Funding & Valuation
o Financials
o Unit Economics

2. * Person has left the company
Founded:
Tom Blomfield
Jonas Templestein
Paul Rippon
Gary Dolman*
Jason Bates*
2015
Founders:
President - Tom Blomfield
CEO - TS Anil
Executive
Team:
Total Funding: $497 million
Latest Funding: $75 million – June 2020
Valuation: $1.6 billion
Investors: Passion Capital, Thrive Capital,
Goodwater Capital, Accel,
General Catalyst, Y Combinator,
Reference Capital
Headquarters: London, United Kingdom
Geographies
Served:
United Kingdom
United States
Licensing: UK - Banking License (2017)
USA - Partner Bank
Customer
Base:
Retail individuals (4.45 million)
Small businesses (36 thousand)
1495 as of Feb 2020Employees:
Savings:
OakNorth Bank
Shawbrook Bank
Investec
Charter Savings Bank
Paragon
Cross-border Payments:
Transferwise
Digital Receipts
& Rewards:
Flux
Energy Switch:
Octopus Energy
Ovo Energy
Automated Finance:
IFTTT
Business Banking:
Xero
Freeagent
USA Banking:
Sutton Bank
Partnerships at the core of Monzo
Business Overview
Micro-investing:
Moneybox
Video KYC:
Jumio

3. EXECUTIVE TEAM
Monzo has been built by an experienced set of founders, all diverging
from competitor Starling Bank. While the executive team has only 2
female members, 45% of the total employees are women.
Person
(💁 indicates female execu7ves)
Position Previous Experience Startups Founded
(Before Monzo)
Company Before
Monzo
Present
Tom Blomfield Founder, President 9 years 4 Starling Bank Monzo
Jonas Templestein Founder, CTO 14 years - Tech 1 Starling Bank Monzo
TS Anil CEO 27 years - Finance - Visa Monzo
Alwyn Jones Chief - Finance 19 years - Finance - Barclays Monzo
Mike Hudack Chief - Product 20 years - Tech, Product 1 Deliveroo Monzo
Lisa Nowell 💁 Chief - Risk 23 years - Risk - ClearBank Monzo
Sujata BhaSa 💁 Chief - Operations 24 years - Finance - Amex Monzo
Paul Rippon Ex-Founder 24 years - Risk 2 Starling Bank GBB, Barnacre Alpacas
Gary Dolman Ex-Founder 24 years - Finance - Starling Bank Antler Venture Partner
Jason Bates Ex-Founder 16 years - Product 1 Starling Bank 11:FS

4. 2015 2016 2017 2018 2019 2020
Prepaid A/c & Card Prepaid A/c & Card
Monzo App
Prepaid A/c & Card
Monzo App
Current A/c
Monzo App
Current A/c
Overdraft
FX Transfer
Teen A/c
Joint A/c
Savings Pots
Prepaid A/c & CardDiscontinued in UK
Rewards
Energy Switch
Personal Loan
Monzo App
Current A/c
Overdraft
FX Transfer
Teen A/c
Joint A/c
Savings Pots
Prepaid A/c & Card
Rewards
Business A/c (SME)
Monzo Plus*
Energy Switch
Personal Loan
Monzo App
Current A/c
Overdraft
FX Transfer
Teen A/c
Joint A/c
Savings Pots
Prepaid A/c & Card
PRODUCT STACK
Monzo started out with a prepaid account & card
in the UK. On obtaining banking license in April
2017, it introduced its current account, which
saw 94% adoption from existing customers.
It expanded to the USA in 2019 with its prepaid
account, card & savings pots offerings.
Own Products Partner Products
* Monzo Plus relaunched with improved features in 2020, after initial release in 2019
🇺🇸 🇺🇸
Savings Marketplace

5. 0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2015 2016 2017 2018 2019 2020
Numberofcustomersinthousands
CUSTOMER ACQUISITION
100k
500k
1 Mn
2 Mn
3 Mn
4 Mn
14 months
14 months
7 months
8 months
3 months
6 months
Growth spurt from
TV ad campaign
While Monzo’s primary customer base growth is driven by organic
referrals, the fintech shifted gears to paid marketing-driven
growth from 2018 with TV ad campaigns and more.
User base growth was primarily
attributed to user referrals up to 2018
Marketing spend grew 600%
in 2019, compared to 2018
Average # of friends on Monzo per customer
15 19 24
2018 2019 2020
Monzo launches in Nov
2015 with 5000 prepaid
card users in the UK
Monzo aims to build customer stickiness by onboarding
more people from users’ social circles on the platform
March 2020
4.4 Mn
July 2020
5x
2x
2x
1.5x
1.3x

6. COMMUNITY BANKING
Monzo has been a community centric bank from the beginning,
taking constant user inputs for product development.
It has 44,352 community members as of July 2020.
Online Forum Events Social Media
• Active feedback in product
development
• Ideas for new products and
features
• The Coral Crew – most active
community members that act as
community leaders
• Country-wide community
meetups
• Open Office days @ Monzo HQ
• Educational seminars, product
launches and more
• Monzo Saving Squad on FB with
more than 13,000 members
• @MakingMonzo Twitter updates
on backend developments
• Viral social media campaigns
• #YearinMonzo
• #NoBarriersToBanking

7. COMMUNITY FORUM
The Monzo Community Forum is an interactive platform for users to
ideate and give feedback, while Monzo employees can share
updates, solve queries and actively engage with customers.
Proactive Feedback Frequent updates Customers’ wish…. … Monzo’s command Customers as investors

8. FUNDING & VALUATION
Investors:
Monzo has crowdfunded $31 Mn
from more than 40,000 users over
4 crowdfunding rounds.
VC/PE
Corporate VC
Accelerator / Institution
Retail
Monzo’s latest drop in valuation from $2.5 bn to $1.6 bn can be
attributed to the Covid-19 crisis, impacted revenue streams & the
continuing trend of net loss as the company focuses on growth.
3 9 15 44
121
256
401
475
11.6 38.8 64.5 113
360
1400
2500
1600
4.46 4.31 4.19
2.57
2.98
5.47
6.24
3.37
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
0
500
1000
1500
2000
2500
3000
Jun 2015 Feb 2016 Oct 2016 Feb 2017 Oct 2017 Oct 2018 Jul 2019 Jun 2020
Seed Series A Series B Series C Series D Series E Series F Series G
Valuationper$raised
Funding&Valuation($Mn)
Monzo Funding & Valuation
Total Funds ($ Mn) Valuation ($ Mn) Valuation Per $ Raised

9. FINANCIALS
Monzo claims research & development tax reliefs from the HM Revenue & Customers
department of the UK Government
Monzo has been investing in its growth and has yet to reach profitability.
It continues to grow its revenue streams with new products,
while spending more on marketing & building in-house technologies.
5 120 1,814
9,158
35,658
(1,446) (6,889)
(30,546)
(47,164)
(1,13,816)
-150000
-120000
-90000
-60000
-30000
0
30000
2016 2017 2018 2019 2020
Monzo Financials (in £’000)
Net Operating Income Operating Expenses Net Loss
Year Income Expenses
2016
2017
• Interchange fee
• Interest
• Prepaid card scheme
• Personnel
• Marketing
2018 • Interchange fee
• Interest
• Banking services fee
• Prepaid card scheme
• Personnel
• Marketing
• Technology costs
• Current A/c costs
2019
2020
• Interchange fee
• Interest
• Banking services fee
• Partnership commission
• Premium A/c fee (2020)
• Personnel
• Marketing
• Technology costs
• Current A/c costs
Monzo Revenue Streams

10. UNIT ECONOMICS
• Monzo’s initial focus was on growth alone, which
eventually expanded to becoming profitable as well.
• While the digital bank began earning positive contribution
margins per customer in 2019, it still operates at net loss.
2320
1293
860 904 857
1400
1136
360
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
0
500
1000
1500
2000
2500
2015 2016 2017 2018 2019 2020
Numberofcustomers(Mn)
Valuationpercustomer($)
Valuation Per Customer
Valuation per customer Number of Customers
1.63
3.01
0.78 1.71
4.32
27
20
18
16
20
0
0.5
1
1.5
2
2.5
3
3.5
4
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2016 2017 2018 2019 2020
Numberofcustomers(Mn)
Costspercustomer(£)
Marketing & Staff Costs Per Customer
Marketing Staff Costs Number of Customers
-65
-50
-30
-15
2 4
0
0.5
1
1.5
2
2.5
-70
-60
-50
-40
-30
-20
-10
0
10
Numberofcustomers(Mn)
ContributionMargin(£)
Contribution Margin Per Customer
Contribution Margin Number of Customers
Feb ‘17 Jul ‘17 Feb ‘18 Jun ‘18
Feb ‘19 Jun ‘19

11. Disclaimer:
All data used for analysis has been taken from publicly available sources pertaining to Monzo
All views & opinions mentioned are personal and do not represent views of any organisations or institutions.
THE TEAM
FINTECH FRATERNITY
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