- U.K. app-only bank Monzo is in early stage talks to expand to the U.S., CEO Tom Blomfield told CNBC.
- Blomfield said the company is in the "very very early stages" of exploring the market and has had preliminary talks with U.S. regulators about acquiring a license.
- Expansion into the U.S. would pit Monzo against large retails banks such as J.P. Morgan Chase, Bank of America and Wells Fargo.
U.K. app-only bank Monzo is in early stage talks to expand to the U.S., CEO Tom Blomfield told CNBC.
The British start-up challenger bank, which has now racked up half a million users, said a U.S. launch won't happen in the very near future, but the company has begun talks with regulators and potential hires.
"The U.S. is a really attractive market for us. They speak the same language, they're broadly culturally similar, compared to other geographies around the world," Blomfield told CNBC in an interview on Thursday.
"I think there's a huge market opportunity there, because there haven't really been any new banks the last 10 years or so ... So I think there is a big opportunity to use modern technology to launch a real consumer facing bank that does the kinds of things consumers expect from a smartphone."
Blomfield said the company is in the "very very early stages" of exploring the market and has held preliminary talks with regulators, but the aim is to first get the U.K. business profitable.
The company offers current accounts, but previously had pre-paid cards that allowed people to top up from other banks. The pre-paid cards business, which were phased out in the past couple of months, caused the company to lose £65 ($90) per customer. After moving away from pre-paid cards, the company now loses £25 per customer and is hoping to get this figure between £15 and £20.
From then, the hope is to sell customers lending products, mainly overdrafts. Monzo has been testing overdrafts with a few hundred customers, Blomfield said, but everyone should be able to access the feature in the coming months.
"That should get us to marginal profitability," Blomfield said, adding that it won't likely happen this year, but perhaps in 2019.
Monzo will also need to seek approval from a number of regulators including the Office of the Comptroller of the Currency, Federal Deposit Insurance Company and the Federal Reserve for a license.