Source: Fintech Blueprint
Compiled and organized by BitpushNews
Foreword
Over the past decade, digital banks and crypto finance have jointly reshaped the global retail financial landscape. Digital banks have penetrated traditional banking territories with mobile-only accounts, low fees, real-time payments, and integrated savings and lending; crypto platforms have entered through trading, custody, stablecoins, payments, and wealth management, creating revenue models that combine fees, subscriptions, and spreads.
Today, the boundaries between them are increasingly blurred: Revolut covers crypto, stocks, forex, insurance, and subscription services; Nubank has deeply penetrated Latin America with credit cards, loans, and digital accounts; Monzo remains “bank-first,” building its business model on deposits, loans, and interest income.
Market valuations for such companies are also clearly diverging: asset-light, fee-driven, global platforms with high ROE tend to command higher multiples; whereas interest-margin-driven digital banks with high domestic market exposure and lower capital efficiency, even if profitable and growing steadily, are often valued according to traditional banking logic valuation, and Monzo sits right in this valuation gap. With 15 million users, three consecutive years of profitability, and revenue growth nearing 40%, it appears notably “cheap” amid acquisition talks with Nubank and valuation comparisons with Revolut. Behind this lie both differences in business models and shifts in the overall valuation logic for the crypto and digital banking sectors.
The wave of new banks
Monzo was founded in 2025 and is one of the pioneers of digital banking in the UK. Today, it has 15 million users, rivaling some established domestic banks, and consistently leads its UK competitors in overall service quality. Nearly half of its users also report using it as their primary bank account.
This is reflected in last year's strong performance:
Over the 12 months ending March 2026, the bank's revenue increased by 39% year-over-year to £1.7 billion, and its customer base grew by 25% to 15.2 million.
In the UK, about one in five adults uses this banking app. It has also been consistently profitable for the third year in a row.
Pre-tax profit increased by 44% to £87 million, reversing the £119 million loss reported in FY22.
A large portion of revenue comes from interest income on deposits, loans, and government bond investments, accounting for 70% of total revenue. The remaining 30% comes from fee income generated by payments (foreign exchange and exchange fees) and subscription charges. Growth is primarily driven by deposits, which increased by 55% to £25.7 billion. Monzo passes on a portion of the underlying interest to users through its savings products, offering up to 3.5% APY to customers. This is reflected in the growing wealth business segment below.
Despite its strong performance, Monzo’s valuation has remained remarkably stable. It raised $500 million at a $4.5 billion valuation at the end of 2021, during the peak of fintech venture funding. Last year’s latest employee share sale raised its valuation to $5.9 billion—meaning a mere 31% increase over three years, while annual revenue grew from £154 million to the current £1.7 billion.
During the same period, competitor Revolut increased from $33 billion in 2021 to $115 billion in a secondary sale this July, a 3.5-fold growth. This values Revolut at approximately 19 times its 2025 revenue, compared to Monzo at just 3 times revenue.
The recent acquisition talks with Nubank represented a bet by Monzo to close the gap, giving the Brazilian bank a significant foothold in the UK. Monzo reportedly sought a valuation of up to $13 billion, about eight times its revenue. However, Nubank’s stock dropped 10% on the news, erasing $6.6 billion in market value. Days later, Nubank confirmed it would not move forward with the deal.
Popular in theory, but lacks real adoption
So why would a profitable, rapidly growing bank with 15 million customers trade at such a significant discount compared to its peers? In our view, fintech valuations often come down to two factors: the efficiency with which it leverages existing capital, and how quickly it can grow.
The first point is measured by return on equity (ROE), which indicates how much profit a company generates for each dollar invested by shareholders. Monzo’s ROE is quite low at just 7%, even below that of established banks Lloyds and Barclays (each around 10%), and only a small fraction of Revolut’s 35%.
This is likely due to Monzo's banking priority strategy.
With a full UK banking license obtained in 2017, the company built its business around deposits and loans, resulting in 70% of its revenue coming from interest. Its first acquisition of a mortgage broker, Habito, further strengthened this strategic direction. This approach paid off during a period of high interest rates and became the primary driver of the bank’s profitability.
But to improve efficiency, Monzo needs to significantly increase its loans.
Today, loans account for only 8% of its assets, with the rest held in cash and government bonds. Nubank demonstrates what this model looks like when fully scaled. Most of its revenue also comes from interest, but loans and credit cards make up 40% of its assets, much of it lent to underbanked consumers in Latin America. The result is a 30% ROE.
Meanwhile, 76% of Revolut's revenue comes from fees generated by its foreign exchange, trading, cryptocurrency, subscription, and insurance services. It has a 35% ROE.
Then there’s growth. Monzo is still growing rapidly, adding a record 3 million customers last year, but its home market is becoming increasingly crowded. Revolut received a full UK banking license in March and now has 13 million UK customers, which it can try to convert into banking clients. Chase Bank, Zopa, and most recently Wise, have all launched everyday current accounts.
There is still ample room for growth, but investors would be less anxious if Monzo could replicate its model overseas. Earlier this year, the company exited the U.S. and cut 50 positions (source). It initially applied for a banking license in 2020 but withdrew it a year later, ultimately leading to leadership turmoil, with then-CEO TS Anil stepping down. The company’s current focus is on Europe, where it recently obtained an EU banking license from the Central Bank of Ireland and has begun serving customers in Ireland and Spain.
According to reports, expansion is now a key reason for Monzo’s fundraising, but this puts the company in an awkward position. Nubank exited due to pricing. Private equity firms CVC and Advent lack the strategic rationale that Nubank had, so they may be more sensitive to price. Monzo is reportedly seeking to sell up to 15% of its shares, and we expect its final valuation to be below expectations.
This isn't the end of the story.
Monzo has one of the most loyal customer bases in UK banking and a profitable business still growing at nearly 40% annually. If it can increase returns by lending more deposits or boosting fee income, and demonstrate that its model works in Europe, a higher valuation should follow. Until then, the market will likely continue to price Monzo as an excellent bank rather than a fintech company.
Twitter: https://twitter.com/BitpushNewsCN
BitPush Telegram community: https://t.me/BitPushCommunity
BitPush TG subscription: https://t.me/bitpush