UK challenger bank Monzo is facing new setbacks as it is reportedly going to cut 120 jobs.
Monzo started 2020 with a lot of optimism. In February it announced plans to hire 500 new employees and to take another crack at launching a premium service. The initiative would see it grow its workforce to roughly 2,000 employees. Then the coronavirus happened.
Like many other European challenger banks, Monzo quickly felt the shock waves of the pandemic. In a matter of weeks, it saw the rate of new signups slow down, was forced to close its Las Vegas office and let go the 165 staff members who worked there, reportedly furloughed 295 UK staff members and had to fight back rumours on social media sites that it was going bust. UK rival Revolut had to denounce similar rumours about its imminent shutdown.
Another symptom of the company’s problems was highlighted by the news that it was looking to raise between £70m and £80m, but at a rumoured 40% reduction of its valuation.
In an attempt to show solidarity with its workers and the people affected by the crisis in general, CEO and co-founder Tom Blomfield announced at the end of the March that he wouldn’t take out a salary for a year and that several of his board members would take a 25% pay cut.
“Unfortunately we haven’t been able to achieve the goal of preventing the risk of redundancy at this time. It’s genuinely heartbreaking to share the news,” an internal memo seen by Reuters said.
That means that roughly 8% of the staff that could be made redundant. It is said that most of the redundancies will occur in the challenger bank’s head office and operations teams.
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