UK challengers Revolut and Monzo combat claims they are going bust

via FinTech Futures

Revolut and Monzo have both responded to rumours circulating last week which suggested they could be going bust as the coronavirus continues to take its toll on the world’s economy.

The claims, based on screenshots of messages which accused Monzo of not paying its staff and accused Revolut of being on the cusp of going bust, are being paired with warnings by people on Twitter telling customers to withdraw all their cash from the banks.

The sources of the claims included “a friend whose dad works for Monzo”, and an employee at a stockbroker which texted a group chat saying Revolut “was about to go bust”.

Revolut has since dubbed the claims “fake news”, and Monzo has also assured customers that it is “here to stay”.

Whilst Monzo account holders’ balances are fully protected up to £85,000 by the Financial Services Compensation Scheme (FSCS). Revolut does not offer the same security on its customers’ funds, prompting the stockbroker source to say “there’s no guarantee that you’ll get your money back from them”.

The challenger bank is trying to change this, after it emerged earlier this month that Revolut was trying to land a UK banking licence before the end of this year.

Co-founder and CEO of Revolut Nikolay Storonsky reassured customers: “The coronavirus pandemic is causing unprecedented movement in financial markets.

“Naturally, this can be alarming and can allow rumours and false information to spread quickly. To put your mind at ease, I’d like to make Revolut’s position super clear […] for Revolut it’s business as usual.”

Storonsky points customers’ attention to the huge half a billion-funding round it landed last month, which now ranks it as the joint highest-valued European fintech alongside Klarna at $5.5 billion. The firm is certainly not short on money.

As for Monzo, its CEO Tom Blomfield responded to the rumours: “Monzo is not going bust. Source: I am the CEO.” Monzo’s employees have also refuted claims that they have not been paid.

The bank is anticipating a £100 million funding round led by SoftBank, which was revealed in January. The close date for the deal is unknown.

If rumours like this  could have a detrimental effect on the banks in question if they gained more traction. If lots of customers do withdraw all their money, creating a bank run, the likes of Monzo and Revolut could see a significant blow to their banking capitals.

But so far, it seems the rumour have had no major effect on either institution, which are both diverting all their efforts to dispelling the rumours online.