Banking licence restrictions lifted on Monzo

One of the City’s more prominent retail fintech startups, Monzo, officially became a bank this week, with the lifting of its banking licence restrictions by the authorities.

The startup had been building an app-based bank recently, signing up users to its beta test using a prepaid MasterCard.

It initially was providing a current account-like service, whereby users can plan, budget and spend in real-time, managing it all from their smartphones.

“We’re currently running live bank accounts with a small group of users, and we’ll slowly be expanding that group over the coming months to put our banking system through its paces and ensure everything works as expected,” said CEO Tom Blomfield.

“As we get used to running current accounts day-to-day, we’ll look to offer accounts to larger numbers of people over the summer, including groups like our recent investors and pre-registrants from the crowdfunding.”

Monzo had received £20m in a funding round in February from Thrive Capital, Passion Capital and Orange Digital Ventures.

It was also running a £2.5m crowdfunding round, which valued the bank at £65m on pre-money terms.

The firm had not yet revealed how it planned to make money, as it did not charge any fees for its beta accounts and did not allow overdrafts.

It’s understood it planned to turn its app into a ‘market’ of financial services, allowing customers to select products from third parties within the app and apply them to their Monzo bank accounts.