Monese, a fintech company, has taken a loan from Pockit after HSBC devalued its investment.
- This financial move follows HSBC’s $35m investment into Monese last year, now written down to zero.
- Pockit was previously in discussions to acquire Monese’s consumer division amid financial instability.
- Monese’s losses in 2022 increased to £30.5 million, surpassing revenues of £27.7 million.
- Pockit, focusing on underserved communities, has itself recently raised £7.9m in funding.
Monese, a fintech company that facilitates money transfers, has encountered financial strains leading to its recent borrowing from the card company Pockit. This debt agreement, undisclosed in size and terms, comes after HSBC, previously a significant shareholder with a $35m investment, wrote off its stake. HSBC’s decision follows its strategic move to launch its own money transfer application, Zing, aimed at increasing its market foothold and competing with major fintech firms.
Despite drawing investments from prominent entities such as PayPal and IAG, Monese has warned of material uncertainties in securing future fundraising, jeopardising its status as a going concern. In 2022, the company’s financial statements revealed a significant loss of £30.5 million, a 70% increase from the previous year, against a revenue of £27.7 million. A company representative noted that losses have since diminished to single-digit millions in 2023, although specifics remain unspecified.
While Monese navigates these financial hardships, Pockit, based in Cardiff and catering primarily to low-income demographics, has also made strategic financial moves. Known for providing banking services to individuals often overlooked by traditional financial institutions, Pockit had been exploring the acquisition of Monese’s consumer division. In terms of its own financial growth, Pockit secured £7.9m in funding, spearheaded by Puma Private Equity, supporting its initiatives to combat financial exclusion.
The partnership and funding challenges faced by Monese reflect broader dynamics within the fintech sector, where companies often pivot to align with evolving market needs and shareholder expectations. The sector’s rapidly changing landscape demands adaptability, as evidenced by Monese’s decision to spin out its B2B platform, XYB, into an independent entity, thereby focusing on core competencies.
Pockit’s commitment to addressing financial exclusion and supporting underserved communities underscores its resilience and strategic focus amidst the economic challenges faced by its peers. The recent funding round, which included North East Development Capital Fund investment, marks a significant step in Pockit’s expansion, particularly with plans to establish a new office in Newcastle.
As Monese grapples with its financial challenges, the fintech’s new relationship with Pockit underscores the complex dynamics within the industry.
