Monzo is looking to launch its own mobile phone service in the UK, in a move that could heighten competition among big phone groups and secure further revenue for the growing digital bank.
The online-only lender, which was launched in 2015, is in the early stages of developing a digital sim card: a software version of the insertable chip used to connect a phone to cellular networks and the internet.
That could open the door to lucrative mobile phone contracts with new and existing customers, putting pressure on incumbents such as VodafoneThree and the BT-owned operator EE. Big phone providers are already facing competition from financial firms including Revolut and the buy-now-pay-later provide Klarna, which are also trying to take a slice of the mobile phone market.
A spokesperson for Monzo said: “Monzo is known for transforming products – and an entire industry – to deliver a great experience for customers. So 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, and are in the early stages of developing this idea.”
The move, which was first reported by the Financial Times, would help diversify revenues for Monzo, which has already gone from a scrappy newcomer luring millennials with its sleek app and hot coral pink card, to a fully licensed bank with more than 13 million UK customers and more than 3,900 staff.
It could help increase the company’s valuation before an anticipated initial public offering. Monzo was last valued at £4.5bn in October 2024 when employees sold stock to existing investors. This followed a funding round in May the same year that raised £500m.
While its valuation has lagged significantly behind its rival Revolut, which was last valued at $45bn (£33.6bn), Monzo has focused most of its growth in the UK and gained a coveted banking licence from British regulators in 2016. Revolut has only been granted a restricted licence and, 12 months on, has yet to have its application fully authorised despite government efforts to hasten the process.
Monzo was recently embroiled in controversy and fined £21m over weak financial crime controls. An investigation by the Financial Conduct Authority found that the controls were lax enough that customers were able to register for accounts using “obviously implausible UK addresses when applying for an account”, including 10 Downing Street, Buckingham Palace and Monzo’s own headquarters.
The bank’s chief executive, TS Anil, said last month that the FCA fine drew a line under issues he said had been resolved and were “firmly in the past – with our learnings at the time leading to substantial improvements in our controls”.
