Pockit, a UK-based fintech company that focuses on providing financial services to underserved populations, has acquired Monese, the digital banking platform founded by Estonian entrepreneur Norris Koppel.
The merger brings together two fintech companies with similar missions: offering banking alternatives to individuals who struggle to access traditional financial services, including migrants and those with low credit scores. The newly combined entity will now serve over three million customers across the UK and Europe.
Monese was once a shining star in the UK fintech scene. Founded in 2013, it became the first mobile-only banking service in Britain, quickly gaining traction by allowing users to open bank accounts without the usual residency or credit checks required by traditional banks. The idea for Monese was born from Koppel’s own experience when, as a new migrant to the UK, he found it impossible to open a bank account due to lack of local documentation. This personal struggle inspired him to create a solution for others in similar situations.
Despite early successes and once being valued at around £1 billion, Monese hit financial difficulties, seeking additional funding to secure its future. Pockit’s acquisition appears to have come at a critical moment. While the exact terms of the deal remain undisclosed, it is understood that Pockit acquired Monese for a modest sum. Monese’s consumer banking business will now be integrated into Pockit, while Monese’s business-to-business (B2B) arm, XYB, has been spun off as a separate company.
Expected to process approximately £5 billion
Pockit’s CEO, Virraj Jatania, described the deal as “transformational,” emphasising the potential to expand financial inclusion on a larger scale. Jatania highlighted that Pockit’s primary goal is to address the financial needs of the 17.5 million people in the UK who are currently underserved by traditional banking institutions.
The combined company is expected to process approximately £5 billion in transactions annually. This increased scale could give Pockit the capacity to develop more targeted products for its customer base. Jatania insists that this is not a rescue operation but rather an opportunity to leverage Monese’s established presence, particularly in Europe. Monese’s existing customer base and infrastructure will allow Pockit to extend its reach and improve operational efficiency.
The deal is backed by Pockit’s investors, which include high-profile figures like Sir Alex Ferguson and private equity veteran Jon Moulton. An additional £15 million investment, led by Puma Growth Partners, will fund the integration of the two companies.
Challenges faced by fintech companies
This acquisition also marks the end of an era for Monese, which had attracted significant backing from large investors, including HSBC and the UK government’s Future Fund. HSBC had invested $35 million into Monese in 2022 but wrote off its stake this year following the company’s struggles.
Norris Koppel, who built Monese from his experience as an Estonian immigrant navigating the UK banking system, is expected to remain involved with the new company, although details about his role moving forward are yet to be clarified.
As Pockit and Monese continue to operate independently during a review period, the future direction of this merger remains to be seen. However, the deal underscores the increasing challenges faced by fintech companies that have scaled rapidly but are now navigating economic headwinds and increased competition.
