Monzo Targets UK Mobile Market in Revenue Push
Monzo is developing plans to launch a UK mobile phone service as the digital bank seeks to diversify its revenue streams beyond traditional banking products.
The London-based lender is exploring the launch of its own digital SIM and monthly contract offerings, according to people familiar with the matter.
The move would mark another step in Monzo's evolution from a challenger bank targeting millennials to a broader financial services provider.
The company confirmed it was in the early stages of developing the proposals but provided limited detail on timing or pricing structures.
Fintech firms target mobile sector
Monzo becomes the third major fintech company to target the UK mobile market. Revolut and Klarna have both announced plans to offer mobile phone services in Britain, with each company having around 11 million UK customers.
The trend reflects efforts by digital financial services companies to expand beyond their core offerings as they seek new revenue sources and higher customer lifetime values.
Octopus, the investment group that owns the energy company, is exploring an offering via a subsidiary, according to people familiar with the matter.
These moves create pressure for established mobile network operators including EE, Virgin Media O2, and the newly merged VodafoneThree.
Monzo has 13 million UK customers and launched in 2015, securing a full banking licence from UK regulators in 2016.
Market dynamics favour new entrants
Mobile virtual network operators gained ground in the UK market during 2024. MVNOs such as Tesco Mobile and Lebara added 1.6 million customers to their networks while the four largest traditional operators collectively lost 180,000 subscribers, according to research by Enders Analysis.
This marked the first year that traditional mobile operators recorded a net decline in subscriber numbers.
MVNOs operate by using the infrastructure of major telecommunications groups while typically offering lower prices to consumers. This model allows companies like Monzo to enter the market without capital investment in network infrastructure.
Digital banks seek revenue diversification
The mobile expansion reflects challenges facing digital banks in establishing themselves as primary account providers for customers. This limitation restricts their access to deposits and creates pressure to build alternative revenue streams.
Digital banks including Monzo target the UK's traditional "big four" lenders – Lloyds, Barclays, NatWest, and HSBC – through user-friendly mobile applications and low fees for customers travelling abroad.
These challenger banks have attracted younger customers but have struggled to cement themselves as the primary account of their users, limiting their access to deposits and spurring them to build new revenue streams.
Revolut has developed a wealth business allowing users to trade stocks and cryptocurrencies. This division generated revenues of £506m (US$684m) in 2024, demonstrating the potential for non-banking services.
Monzo is likely to enter the market as a mobile virtual network operator, which serves customers without building its own underlying infrastructure.
Regulatory and valuation backdrop
Monzo was valued at £4.5bn (US$6.09bn) in October 2024 when employees sold shares to existing investors. This followed a funding round in May that raised £500m (US$676m).
The valuation remains below that of Revolut, which was last valued at US$45bn. However, Monzo operates under a full UK banking licence while Revolut holds only a restricted licence despite applying for full authorisation.
Monzo recently received a £21m (US$28.4m) fine from the Financial Conduct Authority for weak financial crime controls.
The investigation found that customers were able to register accounts using implausible UK addresses including 10 Downing Street, Buckingham Palace and Monzo's own headquarters.
TS Anil, CEO of Monzo, said last month that the FCA fine drew a line under issues that had been resolved and were “firmly in the past - with our learnings at the time leading to substantial improvements in our controls”.
The mobile service development comes as Monzo prepares for a potential initial public offering, with additional revenue streams likely to support higher valuations in public markets.
“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,” a Monzo spokesperson says.
