How Monzo became a £4bn business

You can listen to our podcast interview with TS Anil here.

It is the summer of 2020. Monzo is one of a collection of new digital banks that is growing rapidly in the UK, alongside Revolut and Starling. Its latest financial results show that during the past 12 months, it has more than doubled the number of customers it has from 1.6 million to 3.9 million.

But the results also include some concerning numbers. Annual net losses have widened from £47m to £113m. Analysing the results, the Financial Times said that Monzo was a bank “favoured by those who like to drink £6 Negronis at rooftop bars in south-east London”. But as an actual business, it had a problem.

"Flicking through the results, it’s achingly clear what the problem is," the FT wrote. "Monzo has yet to find a real business model." Banks make money by lending money to customers and charging them interest. But Monzo was barely issuing any loans. It had customer deposits of £1.4bn but only made £124m of loans and advances, according to the FT analysis.

Investors also seemed concerned. Monzo had raised £58m of new funding from investors in 2020. This valued the company at £1.25bn, which was impressive for a business that was only founded in 2015, but it was around 40 per cent less than its value in the previous fundraising round. valuation reflected the challenges that Monzo was facing and how the Covid-19 crisis had slowed its growth plans. On top of all this, Tom Blomfield, the co-founder of Monzo, had quit as chief executive. Blomfield would later say he had been struggling with his mental health.

“I was stressed, definitely. I suffered anxiety that impacted my sleep. Did I border on depression at times? I don’t know,” he told The Guardian. Blomfield was not enjoying the challenge of scaling up Monzo from a promising start-up to a big company.

“I stopped enjoying my role probably about two years ago,” he said in a 2021 interview with TechCrunch. “Taking on a bank that’s 3, 4, 5 million customers and turning it into a 10 or 20 million-customer bank and getting to profitability and IPOing it – I think those are huge, exciting challenges. Just honestly not ones that I found that I was interested in or particularly good at.”

This was the backdrop to TS Anil becoming chief executive of Monzo in 2020. Anil initially joined in 2020 as the chief executive of Monzo’s US business after 25 years working in the finance industry around the world for Citi, Capital One, and Visa. He was working in San Francisco, California, for Visa when the opportunity to join Monzo emerged.

“My first impressions of Monzo predate my starting in the company and cut to the heart of why I was excited about joining Monzo in the first instance,” he says. “I had seen from the outside, and in conversations with the Monzo team before I joined, an extraordinary culture, which you couldn’t make up. Customer-centricity and building everything around the customer was a deeply felt belief in the company. The initial tech-stack platform had been built and there was a magical product-market fit.”

After joining in February 2020, Anil’s job quickly changed. By May 2020 he had been named chief executive of the whole business and the world was in lockdown due to the Covid-19 crisis. Anil had been encouraged by Blomfield and Gary Hoffman, Monzo’s chairman, to put himself forward as the next chief executive, but he was in lockdown in California while Monzo was based in London.