Monzo launches business accounts trial
Written by Hannah McGrath
Challenger bank Monzo has opened the waiting list for its first business account, designed for small and medium-sized enterprises (SMEs) and sole traders.
It will be made available to the first 100 applicants as part of beta testing of its features, with roll-out of the full service envisaged for the end of 2019. The move will mark the first time the lender has charged customers for the use of its services.
Announcing its plans to tap into the SME banking market in November, the bank stated: “There are more than five million SMEs in the UK, and almost nine million people either run their own small business or work for one.
“And because the SME market is so big, it’s also a good opportunity for us to grow revenue and help build Monzo into a sustainable business.”
Monzo’s foray into business banking comes after rival challenger bank Starling launched a range of mobile-only accounts for small businesses and sole traders last year.
The lender, which last year hits its one million customer target for current accounts, has been developing a strategy to diversify its range of products and generate profits after reporting a £33.1 million loss in 2017.
In December, Monzo launched a £20 million crowdfund campaign on CrowdCube as a final addition to a Series E funding round that has seen it raise £85 million in total and valued the FinTech at more than $1billion.
Monzo has also submitted a shortlisted bid for a share of the £775 million RBS Remedies Fund.
Explaining the decision to launch a pilot phase involving 100 customers, Jordan Shwide, operations analyst, said: "We’re starting with a small test so that we can really understand how account features and our internal processes need to change before we can launch more broadly.
"We will work closely with our initial users to understand what problems we can actually solve, what works well, and what doesn’t work so well."
Revenue from business accounting services could help Monzo to increase revenues and compete with incumbent lenders for a share of the market in more traditional banking products.
In an interview last year, one of the company’s lead engineers told FStech of its ambition to reach 10 million customers and expand internationally.