UK neobank Monzo pulls US bank charter application

U.K.-based digital bank Monzo pulled its U.S. bank charter application after it was told by regulators it wasn’t likely to be approved. The company, which has a banking license in the U.K. has around 5 million customers.

Why should we care?
Monzo may have thought a U.K. banking license in hand would ensure a smoother path with U.S. regulators on its journey to a U.S. charter, but the company’s inability to turn a profit was likely perceived as a risk. Auditors previously noted that losses may hinder the company’s long-term prospects. The road to the U.S. market, however, may not necessarily be closed for Monzo. The company says it’s still committed to pursuing the U.S. market, while investing in its U.K. operations. “We have big ambitions for Monzo U.S. There are many routes to market we’re exploring that have been successful for other market entrants who are now major players,” a company spokesperson said. Monzo joins Revolut among U.K. fintechs pursuing the U.S. market, with Revolut currently in the process of applying for a U.S. banking charter in California. Monzo and Revolut’s ambitions in the U.S. face challenges from other players in the market with significant scale already, including Chime (which could have as many as 20 million customers) Current, and Varo.