The British mobile bank Monzo is currently assessing the potential prospects of a merger with the Danish financial institution Nordic peer Lunar Group A/S, as reported by the media concerning sources aware of the relevant intentions of the digital lender.
The virtual bank considers the possible transaction as the most important stage in the implementation of the strategy to expand the scope of its activities in Europe. Media sources, who provided information on condition of anonymity, say that negotiations are currently underway on the structure of a potential association.
Information from the PitchBook data provider indicates that Lunar last raised funds last year. Then the bank received investments for about $ 2.2 billion. The lender’s investors are Kinnevik AB, Tencent Holdings Ltd., Greyhound Capital, and Social Capital. Since then, there has been a trend of a sharp drop in the value of many fintech firms, the main reasons for which were rising interest rates and a decrease in risk inclination. Against the background of problems in the banking sector, in which the Silicon Valley Bank collapsed, and the difficult situation in the field of cryptocurrencies, where the largest FTX exchange went bankrupt, investors began to show great caution when interacting with startups.
Fundraising for Monzo in 2021 cost the lender $4.5 billion. Then the bank received funds from Abu Dhabi Growth Fund, Coatue, and Tencent, as well as from existing shareholders, including Accel and General Catalyst.
Media sources say that Monzo is also currently exploring other ways to scale its activities in Europe. Insiders did not specify which options the lender is considering. Media sources also note that the probability of a merger deal with a Danish company is not very high.
Monzo has gained fame in certain consumer circles because this lender issues debit cards in bright coral color. The financial institution was established in 2015. Initially, the digital lender positioned itself as an alternative to traditional British banks. Currently, the number of users of the Monzo mobile application exceeds 7.5 million people. The bank was able to reduce losses and increase revenue as a result of the expansion of lending and business services.
Lunar was also founded in 2015. Currently, the lender serves more than 650 thousand customers in Denmark, Sweden, and Norway. The bank operates only in the digital space and does not have a traditional network of branches.
Neobanks like Monzo and Lunar are part of the fast-growing financial technology industry. Venture capital firms are channeling billions of dollars of investments into the development of virtual lenders as part of their aspirations for a profound transformation of the financial industry.
As we have reported earlier, UK Neobank Monzo Records First Monthly Profits.