Monzo has withdrawn its application for a U.S. banking license, a setback for the U.K. challenger bank, which is plotting an expansion into the U.S. market.
Government sources reportedly told Monzo its bid would be turned down, according to the Financial Times. Monzo did not return a request for comment.
At the end of June, Monzo reported an annual after-tax loss of about $150 million in 2020, up from a loss of $64 million the prior year. It also reported that its revenue tripled from $27 million to $91 million. Monzo, which has a banking license in the U.K., made $194 million in loans in 2020, up from $25 million in 2019.
The challenger bank blamed the pandemic for the losses, saying its credit losses for 2020 were $27 million, up from $5.4 million in 2019. Monzo also said disruptions tied to the pandemic have led it to doubt its ability to continue as a going concern.
Monzo applied for a U.S. license in April 2020. It competes with other U.K. challenger banks looking to tap the U.S. market, such as Revolut, which has also applied for a U.S. banking license. Monzo offers a debit card and checking account in the U.S. through a partner, Sutton Bank in Ohio.
Monzo, which has about 5.6 million accounts globally, offers other services such as card controls, which it extended to gambling payments through open banking connections earlier this year. Monzo in September launched a buy now/pay later product called Flex, which offers consumers the ability to split the cost of purchases between about $40 and $4,000 into three installments with no interest, or six to 12 months with a 19% annual percentage rate.
A U.S. banking license would allow Monzo to offer loans and FDIC-insured accounts without a partner bank.
