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Digital-only bank Monzo expects to cross the million customer mark 'soon'

Monzo Bank Ltd will hit one million customers "soon," according to CEO Tom Blomfield.

Launched in 2015, the British digital-only lender currently has around 500,000 customers, he said in an interview, adding that there was a change happening after the initial 20,000 or 30,000 clients had been "pretty niche" and tended to be male, London-based and aged between 28 and 32.

"Demographically, our customer base is becoming more even," Blomfield told S&P Global Market Intelligence on the sidelines of an event at London's Cass Business School on March 8. "We're about 50% male, 50% female, with about 40% of customers in London and 60% outside."

Monzo has completed the passporting process necessary for it to operate in Ireland, but it may be some time before it launches bank accounts in the country, according to the CEO. Plans are afoot for expansion into the U.S. "because it is large and they speak English," but these are still at an extremely early stage, he added.

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Monzo Bank CEO Tom Blomfield
Source: Cass Business School

Monzo completed a £71 million funding round in November 2017, with contributions from venture capital firms Goodwater Capital and Stripe as well as venture capitalist Michael Moritz via various investment vehicles. These firms joined existing investors Passion Capital, Thrive Capital and Orange Digital Ventures, all of whom made follow-on investments.

An IPO is "a milestone, not an end goal" for Monzo, Blomfield said in an interview, adding: "We don't know how far off an IPO is — maybe between three and six years."

Asked how the bank was scaling up to cope with the demands of a growing customer base, Blomfield said it had been growing its workforce and now had 300 employees compared to "60 or 70" in early 2017. He added that his immediate priority for Monzo is to become profitable.

The U.K. has seen a wave of digital-first banks launch in the last four years, but so far profitability has been elusive. Starling Bank and Atom Bank Plc — both launched in 2014 were loss-making in the 2017 financial year, although the former's CEO, Anne Boden, was quoted in City A.M. in December 2017 as saying that she expected the lender to make a profit in 2019.

'Transformative' Open Banking

The "next big thing" in financial services will be "a hub to visualize all of your finances in one place," Blomfield said during a panel discussion at the event. "That thing is not your bank, by the way," he added. "It's a thing that connects your student loan, your car insurance, your mortgage, and makes it all work. That thing is coming."

Monzo is "1%" of the way toward developing such a product, according to the CEO.

"We want to be a market-place control center," he said. "We want to use your data to figure out which products and services you will use."

Open Banking — a piece of U.K. regulation that came into effect in January and allows third-party apps and financial services providers to plug into conventional bank accounts should create new opportunities for Monzo over time, Blomfield added.

"People overestimate the impact of a new technology in the short term and underestimate it in the long term. That applies to Open Banking. It will be a slow start, but it will be transformative in four, five, 10 years," he said in an interview on the sidelines of the event.