LONDON–Fintechs aren’t just gaining a foothold in the U.S.; they are gaining share in Europe, too, as more consumers get comfortable with using online-only financial institutions.
And one of Britain’s most successful fintechs is making plans to enter the U.S.
“So-called fintech companies have sought to take on the world’s biggest banks for years, but only recently have companies like Monzo begun to build a critical mass,” noted the New York Times. “Millions of customers across Europe, most in their 20s or 30s, have signed up over the past two years. And thanks to favorable regulations in the region and an influx of venture capital, that shift is accelerating.”
In the U.K. fintechs have gotten a boost from regulators and government officials concerned about the power of large banks in the wake of the 2008 financial crisis, and they see the start-ups as weakening the hold of traditional lenders, the Times reported. The authorities have adopted policies such as a “regulatory sandbox,” similar to what some have proposed in the U.S., allowing what are known as “challenger banks” to test new financial products and get feedback from regulators before proposing them to customers, according to the report.
‘Pretty Forward Thinking’
Moreover, in Europe, “In addition to making slicker apps, the companies have slashed fees for spending overseas and wiring money. Last year, Monzo became one of the first challenger banks to receive a license allowing it to hold customers’ deposits on its own, a milestone no start-up in the United States has achieved.
“Our regulator is pretty forward thinking,” said Tom Blomfield, 33, the co-founder and chief executive of Monzo, referring to Britain.
Monzo, like other start-up banks, still has to figure out how to be profitable, the Times reported.
“But it has already begun to reimagine banking for an increasingly cashless society. Customers of the future won’t need branches when they can text a customer service representative. Detailed spending breakdowns help account holders control their spending. Doing without retail space and tellers keeps costs down, allowing the company to reduce fees and hire programmers.”
Celebratory GIFs
According to the Times, Monzo sends celebratory GIFs on Twitter to new customers, and offers a bright coral-color ATM card that is Instagram-ready. Users can visit the office to see what’s being worked on, test new features and perhaps even pet Bingo. Or they can view the company’s product road map, published online.
Monzo plans to announce in coming weeks that it is raising about £100 million, at a valuation of more than £1 billion, according to two people familiar with the deal. The deal will make it one of the biggest start-ups in Europe, and Monzo will use the funds to help enter the United States as early as next year, the Times reported.