monzo customer acquisition cost
This includes having the right type and quantity of funds, in the right place, at the right time and in the correct currency. This is because the control environment is not mature and is currently under development. Tax assets and liabilities relating to open and judgemental matters, including those in relation to the R&D reclaim are based on the Bank’s assessment of the most likely outcome based on information available and probability of potential challenge.

Customer deposits of £1.4bn may be doubled from last year, but they are tiny compared to the UK banking sector.

Given the nature of the product and the client base of the Company, we have considered there to be a risk of recoverability over the overdrawn balances – which translates into a risk of overstatement of the net overdraft asset. The lower the CAC for a customer acquisition channel/method, the higher its value for the business. On average, Monzo customers deposited £359 at the bank in 2019 (3.9m customers at the close of 2019 across £1.4bn in deposits). Assess the inputs to the R&D tax credit calculation and challenge any which are subjective or at risk of challenge from HMRC. In September 2017, each active prepaid account cost us £65 a year to run: we paid third parties to process payments and let users add money to their accounts by topping up from another debit card. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. Stage 2: For assets that have experienced a significant increase in credit risk since initial recognition but that do not have objective evidence of impairment, lifetime ECL are recognised and interest income is still calculated on the gross carrying amount of the asset. Included within other assets are £36m of financial assets and £5.9m of non financial assets.

Our key risks currently include different types of operational risk like financial crime, IT resilience, cyber security (including data security). E Burbidge Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. K Woollard Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. The accounting for financial liabilities will largely be the same as the requirements of IAS 39, except for the treatment of gains or losses arising from an entity’s own credit risk relating to liabilities designated at fair value through profit and loss (FVPL).

The expected loss on other financial assets such as cash and trade receivables is not considered material considering the credit quality of the counter parties, and as such has not been calculated. This limited the opportunities that we had to place audit reliance on the design, implementation and operating effectiveness of the key controls that management relies on for the proper functioning of the Company’s systems and processes. Download the Monzo app on iOS But it’s not just about how many people use Monzo, it’s also about who. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. It feels like a lot has changed in those three years. G Dolman A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at

Yet while the 2019 results have proven disappointing, Monzo is showing signs that the digital bank is maturing. Fintech analyst Simon Taylor weighed in that “any high street bank would kill for a CAC that’s as low as Monzo’s,” writing in his weekly newsletter that UK incumbent banks tend to spend around £150 to acquire each user — often due to large sign-up reward bonuses. The directors present their strategic report for the year ended 28 February 2018 for Monzo Bank Limited (the “Bank”, “Monzo” or the “Company”). We focussed on growth for the first six months of the last financial year. The results for the current and prior year are derived entirely from continuing operations. Building a great product requires a lot of investment in technology and the team around it. From a classification and measurement perspective, the new standard will require all financial assets, except equity instruments and derivatives, to be assessed based on a combination of the entity’s business model for managing the assets and the instruments’ contractual cash flow characteristics. Obtain and reviewed the report from management’s tax specialists on the R&D tax credit claim for both periods. In February this year we celebrated Monzo’s third birthday!

Due to the uncertainty associated with the nature of expenses allowable for reclaim in such tax matters, the final outcome may vary significantly. The Company measures the cost of equity-settled options based on the fair value of the awards granted. Journals with higher risk characteristics.

The balance held at Bank of England includes a cash collateral account as part of the Bank being a direct settling participant of the Faster Payments scheme. Customer Outcome Risk – risk that our culture, behaviours and/or actions result in poor customer outcome and/or detriment to customers through our product and services not meeting their needs. The entire overdraft exposure as at 28 February 2018 is classified as Stage 1. The carrying value of the financial assets and liabilities as outlined in the table above approximates to fair value and are categorised as level 2 within the fair value hierarchy. This effectively calculates an ECL for each future month, which is summed to obtain the total of ECL losses. We note from our review of post migration activity reports from, and communication with, the Prepaid Third Party that migrated customer balances are no longer managed by the Prepaid Third Party.

Engaged our specialists to perform a sensitivity analysis on the following assumptions, to establish a range of expected losses: Our validation of key inputs to the impairment calculation model revealed that data flows to the underlying model were materially complete and accurate. Corroborated the conclusions reached by our specialists, by performing a review on the portfolio in light of the observations noted by the specialists and verifying the materiality of the observations on the year end provision. We all know startups that are loss-making and VC-funded are risky.”, James Clark at the listed VC Draper Esprit put it another way, writing: “We need a word for: things companies report in public filings because they are (a) prudent, or (b) required to, which are picked up and reported in the most negative way.”. The next time you see a plan to raise $10m to add 3 million customers (we just saw one), maybe ask a few more questions.

Our approach to risk management supports the wider business strategy. We’ll do that by helping our staff work more effectively with better tools and automation. Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for the Company. To avoid breaching a regulatory capital measure, a board approved Management Buffer of additional capital is imposed above the regulatory threshold. One thing that the Monzo numbers did show us is that it is still a very small business in the context of the banking sector, and so it will — like any small business — get spun around by the macro-economic winds. The Bank has performed historical analysis and identified the key economic variables impacting PD and LGD. We plan to increase growth by adding product features with real network effects, that help people use Monzo together. Without access to basic financial services like bank accounts, you pay more and save less. EAD is based on the amounts Monzo expects to be owed at the time of default. There are no significant contingent liabilities as at 28 February 2018 (2017 none). During the period Monzo continued building the ability to provide banking services to its customers and had the restrictions on its banking licence lifted in April 2017.

Directors Done right, it can become viral. Having considered this and other appropriate enquiries the Directors consider that the Company has raised enough equity to make sure that it can operate for at least 12 months from the date of approval of the financial statements. If you continue to use our website we will take this as meaning that you agree to our use of cookies. Please enable JavaScript to use this form. The increase in staff costs to £9.2m (2017 £2.5m) reflects the additional employees required to support the operational running of the Company. Based on our work performed, the Company has migrated customer balances completely and accurately from the Prepaid Third Party to its core Banking system. We’ve chosen specifically to look at total funding, not just a marketing budget. Based on this work performed and our assessment of the provision that management has recorded, we believe that the amount of the provision recorded against their claim is reasonable at the year end.

As such the Senior Statutory Auditor considered the experience and expertise of the engagement team to ensure that the team had the appropriate competence and capabilities, which included the use of specialists where appropriate. They stagnated early whilst the others continued to innovate. These economic variables and their associated impact on the PD and LGD (no impact assumed on EAD) have been modelled.


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