UK digital bank Monzo has launched its business banking service, providing free and premium accounts, to assist its goal of reaching profitability in two to three years.
The launch follows a year-long beta testing period with some 2500 small and medium-sized businesses.
In addition to the free Lite account, Monzo is offering a Pro variation, which costs £5 a month and offers premium features, such as support with invoices, tax pots and access for multiple users.
With fellow digital bank Starling having recently extended its business offering, the sector is becoming the new battleground for challenger banks looking to attain profitability in the years ahead.
Unlike Monzo, Starling received an injection from the £775m Banking Competition Remedies Fund, in which RBS cash was used to stimulate competition in small business banking as part of the conditions of its government bailout after the 2008 financial crisis.
Monzo was unsuccessful in its application for a share of this funding. Founder Tom Blomfield has said that it would have meant the bank's business accounts would have been live before now and would also have included lending.
"It’s taken a bit longer, and it didn’t have the team to build this, so it doesn’t have any lending right now," Blomfield has said.
Starling is now offering unsecured loans of up to £250K as part of the expansion in its business offering.
Customers will need to already hold a personal account with Monzo to apply so the hope will be that its 3 million customers will contain a large number of traders and small business owners wishing to the use the digital bank for their business needs as well.
Monzo also recently announced it is relaunching its paid-for personal accounts, having ditched them in September 2019 owing to poor customer feedback.
The digital bank holds around £2bn in deposits and was last year valued at £2bn despite reporting losses of £47.2m in 2018.