Monzo, the U.K. challenger bank, continues to be faced with tough decisions linked to the coronavirus crisis and resulting economic downturn.
Following the shuttering of its Las Vegas-based customer support office and almost 300 staff being furloughed in U.K., the company has announced internally that up to 120 U.K. staff are being made redundant. Reuters first reported the news just moments ago — which I have now confirmed based on my own sources.
According to an internal memo written by new CEO TS Anil, following an all-hands earlier this afternoon led by Anil and Monzo co-founder and president Tom Blomfield, the bank is to make up to 120 roles redundant, despite previously stating that furloughs and pay cuts already carried out would mean further layoffs could be avoided. That no longer appears to be the case, with Anil explaining that the current economic situation isn’t expected to revert back to normal quickly.
I understand a full consultation period for those employees potentially affected will now take place, as is stipulated under U.K. employment law. In addition, Anil told staff that in order to recognise their contribution, the bank will be waiving the one year “cliff” from their vesting schedule so that they won’t lose out on any shares due to them.
The announced layoffs add to a turbulent time for Monzo in recent months, as it, along with many other fintech companies, has attempted to insulate itself from the coronavirus crisis and resulting economic downturn.
Last month, I reported that Monzo was shuttering its customer support office in Las Vegas, seeing 165 customer support staff in the U.S. lose their jobs. And just a few weeks earlier, we reported that the bank was furloughing up to 295 staff under the U.K.’s Coronavirus Job Retention Scheme. In addition, the senior management team and the board has volunteered to take a 25% cut in salary, and co-founder and CEO Tom Blomfield has decided not to take a salary for the next 12 months.
Like other banks and fintechs, the coronavirus crisis has resulted in Monzo seeing customer card spend reduce at home and (of course) abroad, meaning it is generating significantly less revenue from interchange fees. The bank has also postponed the launch of premium paid-for consumer accounts, one of only a handful of known planned revenue streams, alongside lending, of course.
And just last week, it was reported that Monzo is closing in on £70-80 million in top up funding, to help extend its coronavirus crisis runaway. However, as new and some existing investors play hardball, the company has reportedly had to accept a 40% reduction in its previously £2 billion valuation as part of its last funding round last June, with a new valuation of £1.25 billion.