Monzo withdraws US banking license application

Monzo has decided to withdraw its application for a US banking license according to sources reported by the Financial Times, a year and a half after its initial application.

The move follows discussions with regulators at the US Office of the Comptroller of the Currency according to the sources, which informed Monzo that their application was unlikely to be successful.

Monzo first launched in the US in June 2019, and the FinTech hoped that a US banking license would improve its competitiveness by enabling it to lend to US customers and offer fully insured deposit accounts.

The report said that Monzo is still committed to US expansion and it intends to expand via its existing partnership with Ohio-based Sutton Bank, as it is unable to function as a standalone lender.

The US is considered to take a stricter stance on issuing banking licenses than the UK, which has sought to promote high levels of competition between banks with its policies post-2008.

Many of Monzo’s competitors continue to pursue US licenses; Revolut began the application process for a US banking licence in March.

Monzo is also facing issues regulatory issues in the UK; in July, the Financial Conduct Authority (FCA) started an investigation into Monzo’s compliance with money laundering regulations. LINK

The challenger bank also faces an uncertain financial backdrop and reported a £115 million loss in its latest financial year, an increase on losses from the previous year of £113.8 million.

However, Monzo is also looking to enter new markets, and announced last month it is set to enter the Buy Now, Pay Later (BNPL) space shortly.

“While this isn’t the outcome we initially set out to achieve, this allows us to build and scale our early-stage product offer in the US through existing partners and invest further in the UK,” said a Monzo spokesperson. “We have big ambitions for Monzo US”.

They added: “There are many routes to market we’re exploring that have been successful for other market entrants who are now major players.”

FStech has reached out to Monzo for comment.

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