Monese, a fintech firm backed by HSBC, is reportedly planning a strategic shift in its business model amid increasing losses. The company, which once sought funding at a valuation exceeding £1 billion, is now considering breaking itself up into two separate entities.
Monese has been serving a customer base that mainstream banks often overlook. With approximately two million customers spread across more than 30 countries, the company has made a significant impact in the fintech space. However, the mounting losses have led to a reconsideration of its business strategy.
The company is reportedly working with Interpath Advisory to explore the possibility of splitting itself into two independent businesses – one focusing on consumers and the other on corporate clients. This strategic move could potentially lead to a sale or further restructuring in the future.
Monese’s decision to consider a break-up has been influenced by various factors. The company has been under pressure from investors to consider this option as it has been trying to raise additional capital over the past year. The company’s CEO, Norris Koppel, has been leading these efforts.
Transformation towards profitability
Interestingly, Monese’s business-to-business arm, known as XYB, is said to power HSBC’s retail banking app. This relationship with HSBC goes beyond just business services; the banking giant invested $35 million in Monese in 2022 for a stake in the company.
A spokesperson from Monese stated that the company has evolved in two distinct directions – the original B2C business and the new, rapidly growing B2B PaaS (Platform as a Service) business. The company is now exploring the best organizational and capital structure to maximize shareholder value.
Despite the challenges, Monese has shown signs of resilience. A source close to the company revealed that it started 2024 on a strong note following a robust performance the previous year. The company has seen continued revenue growth, and its losses have reduced from £30.5 million in 2022 to low single-digit millions. The company is now on the verge of achieving profitability.
However, the plans to break up Monese are likely to take several months to implement and come at a time when the funding environment for fintechs has become more challenging. Despite these hurdles, Monese’s strategic shift could potentially pave the way for a more sustainable and profitable future.