If Northoak is raising £340 million to expand in to the USA how much will Monzo have to raise and how ???
They’re a completely different business, so not sure how much this tells us. I’m an outsider to the financial industry, but I imagine you need a lot more capital to be a lender than to offer current accounts. It also sounds like they are using the funding to invest in their financial modelling software for figuring out who to lend to, again a different focus/need than Monzo.
Bear in mind that running an account for customers is a loss leader for banks . Selling Loans, overdrafts, mortgages, pensions are how banks make money. The more bank accounts they have the more they can sell these products to their customer base - if customers just run their basic accounts through the bank with no savings or borrowing the banks lose money administering the account.
They do need a lot more money upfront though to provide the capital for these potential loans, mortgages etc. Hence the large investment. You can’t loan large amounts of money with little or nothing in the bank.
Returns should be good, but they will be over a longer period of time which means, again, the need for the larger upfront funding.