Monzo Pulls Back U.S Banking Licence Application Due to Regulatory Roadblocks

Monzo, the UK-based online bank has pulled back its application for a banking license in the U.S. The decision was taken after the company was told by regulators that the chances of the application being approved are slim. This is likely to put a dent in Monzo’s international expansion plans. 

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U.S. Regulators Tread with Caution

The story highlights how cautious U.S regulators are when it comes to giving banking licenses to startups. Market penetration and regulatory approval across the European countries and the UK is comparatively easier. Over the past few years, the UK has handed out licenses to a number of companies to increase competition. 

Monzo was positive that the experience of securing a full banking license in the UK would make it easier to make an entry into the American banking sector. However, the bank was informed in recent weeks that its bid to the Office of the Comptroller of the Currency is likely to be unsuccessful. 

The bank said that the withdrawal was not part of its initial plans and that it still has major plans for its U.S. business. Monzo’s stakeholders and key decision-makers were involved in months of deliberation whether a fully licenses bank is the right choice to expand. 

Some of Monzo’s strong rivals such as Peer have witnessed significant growth without a banking license. Besides, steeper card interchange fees across the U.S. have proved to be more sustainable for companies to share revenues with licensed partner banks, contrary to that in the UK. 

Monzo’s American Dream

Currently, Monzo said that it is on course to develop and scale its early-stage product offer in the U.S. via existing partnerships. Besides, it has also launched a pilot program with a few customers through a partnership with Sutton Bank. 

The fintech said that since the company is not required to capitalize a separate U.S. bank, it opens up more investment opportunities in the UK. The company is likely to shift its focus on growth across the UK, particularly due to the disruption caused by the pandemic. 

During the pandemic, the company’s valuation dropped by around 40%. Further, higher capital requirements by the Bank of England along with an investigation over a potential breach have affected business in the UK. 

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Feature Image Source: Image by Photo Mix from Pixabay

Karandeep V

Karandeep was born in Pune, Maharashtra, an upcoming metropolitan city in the Western region of India. While most members of his family are engineers, he had different ideas. He was more inclined toward exploring the non-technical aspects of a business, which is why he studied Bachelors of Business Administration at Symbiosis International University, Pune.  Having said that, his love for new and upcoming technologies remained intact, which is why he has written extensively about technology throughout his career. After a brief stint with a gaming company at the beginning of his career, he discovered that his love for writing was not temporary.  Being a tech geek, he always liked installing and playing around with new applications on his mobile devices and the home desktop. He was fascinated by how technology can simplify even the most mundane and complex tasks with just a few commands. He keeps a close eye on how businesses use different tools to streamline their operations to boost productivity and efficiency.  At ToolsMetric, he writes product reviews that cover the main features and specifications of different enterprise applications. The sheer amount of innovation and hard work that goes into building these tech solutions is one of the reasons why Karandeep loves reviewing these tools. Besides product reviews, he also writes interesting news articles and blogs that track the latest developments in the tech industry.  When he is not writing, you can find him rooted to his seat playing video games, watching movies, or supporting his favorite football team. Since his childhood, he has always loved to travel and explore new places. Traveling is a major part of his life due to a myriad of reasons such as experiencing new cultures, food, and traditions. His other hobbies include playing football, cooking, and running.  You can find him on LinkedIn here.

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