Monzo is considering offering its mobile phone service in the UK. This move would intensify competition between large phone aggregators and generate additional revenue for the emerging digital bank.
The online lender, which was established in 2015, is at an early stage of creating a digital SIM card, a software version of the chip that is embedded to connect a phone to cellular networks and the internet.
This would possibly mark the entry to profitable mobile phone deals with existing and new clients, and pressurize players like Vodafone Three and EE, which is owned by BT. Even financial institutions such as Revolut and the buy-now-pay-later provider Klarna are already in the fray and are attempting to cut into the mobile phone market alongside big phone providers.
A Monzo spokesperson commented: “Monzo is known for transforming products – and an entire industry – to deliver a great experience for customers. So when we heard from our customers that mobile contracts can be a pain point, we set out to explore how we could do this the Monzo way, and are in the early stages of developing this idea.”
The Financial Times first reported the move, which would aid revenue diversification at Monzo, which has evolved since its scrappy beginnings as an upstart aiming to capture millennials with its hot coral pink card and sleek app, into a fully licensed bank with over 13 million UK-based customers and over 3,900 employees.
It can spell growth in the valuation of the company, leading to an expected initial public offering. The last valuation of Monzo was 4.5bn in October 2024, when employees sold their stock to existing investors. This was after a May of the same year financing round amounting to 500m.
Its share price has trailed far behind that of its competitor Revolut, valued most recently at 45bn ( 33.6bn), but Monzo has concentrated the bulk of its expansion in the UK and attained a sought-after banking licence with British regulators in 2016. Revolut was only licensed under a limited license and, 12 months later, the application has still to been approved in full by the government in spite of efforts to speed up authorisation.
Only last year, the bank was also involved in controversy and subject to a fine of 21m over its lax money laundering controls. A Financial Conduct Authority probe concluded that the controls were weak enough that consumers could sign up with clearly nonsensical UK addresses during the account application process, using, e.g. 10 Downing Street, 60 Buckingham Palace and the head office of Monzo itself.
