Digital bank Monzo has withdrawn its bid for a full US banking licence.
The London company made the decision after it was told by regulator the Office of the Comptroller of the Currency that the bid was unlikely to be successful, according to the Financial Times.
The app-based bank, which secured a full UK banking licence in 2017 – allowing it to offer more revenue-generating products to its customers – said it would focus on the UK but still had big plans for the US, where it soft-launched this summer.
“Following recent engagement with the OCC, we’ve decided to withdraw our banking license application for our US startup,” a Monzo spokesperson said in a statement.
“While this isn’t the outcome we initially set out to achieve, this allows us to build and scale our early-stage product offer in the US through existing partners and invest further in the UK.
“We have big ambitions for Monzo US. There are many routes to market we’re exploring that have been successful for other market entrants who are now major players.”
Unlike in the UK, high card interchange fees in the US mean FinTechs can realistically share revenue with fully licensed partner banks, operating with only an ATM card and an app.
For example, Monzo is running a pilot programme with several thousand customers in partnership with Ohio-based Sutton Bank.
It is the latest blow to one of the UK’s tech darlings, which suffered a 40% drop in its valuation during COVID-19 and was subsequently the subject of an investigation over potential breaches of anti-money laundering rules.
The company made a £130 million loss for the year to February, up from £114m the previous year, with auditor EY warning for a second straight year that there was “material uncertainty” over Monzo’s ability to continue operating as a going concern.
It recently launched a buy now pay later product.