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Monzo finally turns a profit, ramps up tech spend £18.5m

The challenger bank has made big investments in tech and is committed to building its own native systems to own every part of its stack

The British digital challenger bank Monzo has finally achieved a year of profitability after ramping up its tech spend and appointing a new CTO. 

In its annual financial results, the fintech pioneer said pre-tax profits rose to £15.4 million ($19.6 million) in the 2023-2024 fiscal year - a marked contrast from a £116.3 million loss the year before.

Monzo tech spend boosted to drive security, app experience

Its technology costs increased by almost one-third from £18.5 million to £48.1 million as Monzo invested in the “quality and security of our platform and core app experience” as well as the automation of processes and controls in its treasury and regulatory reporting systems.

Overall, Monzo posted £880 million in revenue, more than double the £355.6 million from 2022. 

Not a bad result for a bank that only recorded its first month of profit in 2023, just three years after it raised “serious doubt” about its ability to survive the Covid pandemic.

Today, Monzo is one of Britain’s biggest digital banks, achieving a $5.2 billion valuation earlier in 2024 after raising $190 million from new and existing investors including CapitalG, the independent growth fund of Google’s parent company Alphabet. 

Monzo diversity stats also show that the proportion of tech leadership roles held by women increased to 22.5% (up from 15.2% in FY2023), which it described as “progress in an imbalanced sector”.

Going forward, Monzo will "continue to improve our processes by overhauling our internal tools and "keep making sure that our technology platform is resilient and secure with backup services ready to go in case of outages with key suppliers".

In a blog published last week, Monzo confirmed that it uses incremental modelling to handle three billion events on an average day. This is a materialisation strategy (the translation of data models written in SQL into persisted tables or views) within dbt, an SQL-first transformation workflow that can quickly deploy analytics code.

Using an incremental materialisation strategy, Monzo only transforms new data when it runs dbt, instead of building tables from scratch. This approach cuts costs and improves landing times.

Last year, Jonas Templestein, Monzo co-founder and sometime chief technology officer, stepped down to spend more time with his family and "start new adventures". 

“We all owe a lot to Jonas’ vision, creativity, humour and sheer hard work and wish him well in the future,” Monzo wrote in its annual earnings report.

It has now named Matej Pfajfar as CTO. Pfajfar supports the native approach and believes that “owning your own tech stack sets you up for success.” 

In an article for Tech.EU, he wrote: “Leading tech companies build their own platform — just as we do at Monzo… We have deliberately chosen to build most of our technology ourselves, using techniques that are new to the banking industry.

On LinkedIn, we were able to get a sense of the technical prowess of “Monzonauts”. 

The top five skills of its engineering staff are Python, SQL, Java, Javascript and Git, whereas its IT staff’s most common skills are Microsoft Excel followed by SQL, data analysis, Microsoft Office and Python.

Of a workforce of more than 3,000, Monzo employs 175 IT staff and a further 502 in engineering. 

Last year, former Monzo CTO Meri Williams told The Stack noted that the challenger bank was also a heavy user of Apache Cassandra, saying: “We were really pushing the pushing the boundaries of what Cassandra was capable of being used for at the time… we hired some major contributors to the open source Cassandra programme because we wanted those folks in-house so that we could deeply understand the way Cassandra was going to cope under certain conditions.”

She also revealed details of the fast-paced environment at Monzo and other startups, warning that the fast-paced mega-scaling can leave “some of the existing people feeling like they're being left behind or overshadowed by some of the folks coming in from outside”.