But those funds are not certainly used for lending.
Oh no. Its for capitalisation purposes only in the event of a loan book collapse or repeat financial crisis.
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Comparisons with Metro aren’t particularly useful. Their only similarity is that they are new banks.
At the moment the cost of acquiring customers is tiny and the expected lifetime value of each customer is large, therefore it’s a very promising company and expansion is a sound decision at the cost of profit. When their losses come out later this year expect the UK press to have a go at the additional losses but it’s a common route for many of the most successful companies over the past few years.
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That’s what it says here unless I am mistaken - let me know what you think - if I have got it wrong I will gladly retract my post
Metro Bank recently raised a muchneeded £300 million from a bond that pays an extraordinary 9.5%. “Any company that has to pay near10% interest to raise funds is going to be vulnerable, especially if they are a bank,” says the thick-wristed Merlot man. City analysts think a Metro Bank takeover by Lloyds makes sense for at least two reasons. First, Metro Bank’s funding costs are so high that writing new mortgage business isn’t profitable, so it needs a stronger partner to grow.
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But it will lend money below that rate to retail customers - so I believe I am correct
It was urgent recapitalisation as required by the FCA to meet GENPRU1.
Not borrowing at 9.5% to loan at 4%.
So no, you’re not right or are at the very least twisting the facts.
No, you are not. Those money are not used for retail lending. Banks borrow funds from Central Banks.
Demote him to Investor_No2 
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Ok OKI will amend it to raising much needed funds at 9.5%
OK so they don’t use the money raised for lending
but they raise much needed funds at 9.5% - correct ?
Then retail customers apply for loans with metro bank at say 3.7% and above for personal loans - correct ?
That’s not sustainable - correct ?
No, because banks borrow from Bank of England at 0.75%. That’s the rate at which Metro borrows funds to lend out to its customers.
The Bank of England (BoE) base rate is often called the interest rate or Bank Rate (like us!). It sets the level of interest all other banks charge borrowers. The base rate is currently 0.75%.
Shall we get back to Monzo - my point is if sentiment is changing towards challenger banks business model Then funding either dries up or is only offered at silly rates like 9.5% and that’s not sustainable
Monzo’s can’t keep increasing it market value so it can keep raising more and more funds - it needs to show a route to profitability soon.
And the profits pay the 9.5% interest it is raising funds at.
Fair enough I have corrected my post to be more clear
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Last post on this subject now but this is where I read it
Line at the bottom just before the paywall says:
this means it will not return to profits until 2021
By your metrics, Lloyds must be about to go under. Only 50m profits, unsustainable. 
Enough about Metro already. Start a new thread about it.
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Everyone is becoming aware of froth in the venture markets and the fact that a lot of garbage has been making it to unicorn status without viable business models thanks to Softbank inflation and too much capital floating around, but to suggest neo banks need to be profitable asap is missing the massive elephant in the room, in my opinion.
They could all stop aggressively acquiring customers, optimise for profitability and have a great £2-3bn company to exit (as Anne looks set to.do in the next few years), but they are choosing not to.
Monzo, Revolut, N26 and Chime appear to be chasing something bigger. They can see the prize of a trillion dollar valuation for the fintech company/ies that could join GAFA in the next 10 years, so they are playing a different game to Starling or Metro Bank.
VCs have been placing their bets on which one it will be and the race hasn’t even started yet. We’re seeing stories like Revolut getting close to securing a $1bn war chest for global expansion, N26 saying they have no plans to be profitable in the near future. The ball is in.Monzo’s court and they either need to join the high rollers going for the big prize or play Starling’s small game instead.
This is going to be a bloodbath for investor cash and Monzo’s VC investors know this. The winners in this US land grab are going to have to ‘lose’ hundreds of millions if not billions of dollars to establish themselves as the global app for managing money.
Monzo is not going to be profitable for many years.
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All very fair points, but with Sentiment changing fast Monzo may not have many years left to prove their business model is sustainable - i.e. Growth instead of profit.
If your prediction of a blood bath comes true the funding available now may not be available this time next year - VC’s will want to know when their investment is going to show a return or be ready for IPO.
As soon as the failures start that’s when I will be worried if there is no profit date on record
If the funding taps get turned off what does Monzo do then ?
Very simple solution if funding ran dry in 2021… Give up on the GAFA gamble, stop selling £10 for £9 and optimise for profitability. Float with your profitable 10m user bank at £10-20bn.
Monzo have kind of already done this. In the last 6 months have withdrawn advertising and bonuses at the expense of their growth curve.
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