It’s clear that the incumbent banks are now truly playing catch-up on product, and the world is clearly beginning to demand more transparency and technological advancement from retail banks.
With the unpredictable waters being experienced in most sectors due to coronavirus, does anyone have an opinion on either Monzo searching for a buyer or an acquirer increasing possible previous offers to acquire Monzo.
And what do you think is now the most attractive part of Monzo, is it the rapid customer growth, is it the product, or is it the ethos?
I think if Monzo sells, it would only be because of a business failure, or at some point after an IPO.
I think what they would buy is the brand and the customers. Itd most likely be a big bank that could increase its reach and use it to push mortgages to customers, and use the deposits as collateral for that.
I doubt itd be a tech company, I dont think they would have much to bring to the business and banking regulations make selling customer data extremely difficult.
I’d love to see a merger/acquisition with/by Stripe.
They could use Monzo to move up the value chain in the US and Monzo could use their tech chops to vastly accelerate features and compete with other FinTechs (e.g. create a checkout lending product to compete with Klarna, etc.).
No-one wants a brand associated with Millenials (I’ll also add in Gen Z for good measure)!? Of course, corporates are reluctant to be associated with a demographic cohort that will be spending more than any other age group.
When you accept VC money, the clock starts ticking. The VCs need an outsize return and hate zombie companies which are just breaking even, so the pressure is on to deliver a big return in a few years or shut down. Ways to deliver that are being acquired or an IPO (or massive growth to show you’re on the way).
Re promises of no acquisition, Tom being sidelined shows how quickly the script can change - a company has many stakeholders. I hope Monzo thrives though and finds a path to an IPO in a few years.
You answer your own question! They have a small customer base, some potentially usable tech, a small loan book, and some talented people, and a brand that appeals to milleniels.
These things all have value to a large bank, I think. The question is just how much value. Probably not £2bn of value, nor the 1.4bn current valuation. But I can see them buying it at a certain price, it just wouldn’t be great for current shareholders.
How much time do the people ‘answering this question within the company’ have to realise their vision of an IPO though, before time runs out and they have to just sell to whoever is buying?
Monzo is 5 years into an 8 year project as far as the big VCs are concerned (if the guidance from previous investment rounds is anything to go by) so in around 24-36 months there are going to be big investors becoming very vocal about exiting and more so as the months go on.
If Monzo is not ready to IPO in that time, which they may very well not be if corona keeps casting a shadow over their business model and if the US license and roll out experiences any sort of delay, they are going to.come under great pressure from within to sell up anyhow.
Add to that the effect of things not going to plan, for example Tom leaving to found another bank and taking half the executive team with him, or the economy continuing to tank and IPO markets drying up, then you are left with a company looking for any sort of buyer and whoever is the highest bidder, and that’s when Barclays and RBS show up drooling at 10m users to sell mortgages to with no branch costs.
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