British fintech start-up Monzo has launched in the United States, as it looks to challenge the country’s established banking giants.
The London-based company said Thursday that it would initially offer a “few thousands cards” to American customers at launch events in Los Angeles, California
Monzo is one of several so-called challenger banks that operate with only an ATM card and an app. These are new digital banks that are looking to take a slice of the massive financial services sector.
There are already a number of such players in Europe, including U.K. firm Revolut and Germany’s N26, while in the U.S. the main neobanks appear to be Chime and Aspiration.
To help with the U.S. launch, Monzo partnered with domestic lender Sutton Bank. It has selected LA as its initial U.S. base, and is looking to expand to other cities.
“When it comes to consumer apps, banks are at least a decade behind the ease and feature-set of a Lyft or an Airbnb, not to mention sloth-like and unimaginative when compared to the innovation cycle in the apps we use every day,” Monzo’s CEO Tom Blomfield said in a statement.
“With Monzo, we aim to make money work for everyone by working with our community of users to build things that work for them.”
By securing a U.S. launch, Monzo has managed to beat some of its rivals that also have ambitions to expand to the country. Revolut and N26 have both said they are looking to enter the U.S. at some point this year.
The firm says it now has more than two million users in the U.K. and is signing up 200,000 every month. For comparison, Revolut has accumulated over 5 million customers while N26 recently said it has 3.5 million.
But while these challenger banks have managed to grow in popularity, luring in millions of users, they have struggled to translate that growth into profits.
Monzo revealed last year that it was losing £15 ($19) per customer in June 2018, although that figure was down from the £65 cost per customer it ran in late 2017. Revolut meanwhile managed to break even in December 2017, but still posted an annual loss for the year.
Founded in 2015, Monzo will find itself up against America’s financial titans, the big four retail banks being J.P. Morgan Chase, Citigroup, Wells Fargo and Bank of America. Goldman Sachs, meanwhile, has also gotten into the retail banking game with its own online bank called Marcus.
Monzo has raised a total of $268 million from investors including U.S. payments giant Stripe and venture capital firms Accel and General Catalyst. It crossed into unicorn status following its most recent round of funding last year, with a valuation of over $1 billion.