The Push for Profitability
Last year, Nordic neobank Lunar embarked on a mission to achieve profitability amidst challenging funding conditions. While many fintech unicorns in Europe have yet to explore mergers and acquisitions as a growth strategy, Lunar stood out by considering a potential merger with UK-based neobank Monzo. Lunar’s CEO, Ken Villum Klausen, praised Monzo’s CEO, TS Anil, for his innovative approach but clarified that Lunar was not actively seeking to be acquired. Nonetheless, Lunar has previously demonstrated its ambitions for M&A, with a failed bid to acquire Nordic rival Instabank in September 2022.
European Fintech Landscape
Villum Klausen highlighted the absence of a European champion emerging among challenger banks, particularly on a European basis. While regional champions exist, Lunar aims to compete against incumbents across Europe. Supported by its banking license from the Danish FSA, Lunar launched in 2015 as one of Europe’s original neobanks. The bank’s focus on the Nordic region stems from its profitability and the presence of an oligopoly, where consumers tend to stick to one bank due to limited options. Lunar has established its own infrastructure rails connected to the payments clearing system in Denmark, Sweden, and Norway, distinguishing it from other neobanks.
Lunar has made significant strides towards profitability, expecting to reach monthly break-even in early 2024. The bank’s focus on business accounts, which have experienced significant growth, has contributed to revenue expansion. Additionally, consumers are increasingly opting for paid plans, with subscriptions being taken by nearly a third of all new customers. Lunar’s wide range of products, including lending, savings, wealth management, stock trading, and crypto services, have further enhanced revenue per user. The bank has also expanded its platform-based banking services to other banks and fintech companies, such as Trustly, for Nordic payments and pay-outs.
Expansion and Future Plans
Lunar’s success and profitability push have positioned it for a new funding round, following a 35 million euro ‘top-up’ in February 2023. The bank is also preparing to launch in Finland, which will solidify its presence in the Nordic market and serve as a stepping stone into Germany. Villum Klausen emphasized a country-by-country expansion strategy, seeking dominance in each market before pursuing the next. With an eye towards the future, Lunar envisions acquiring Monzo as part of its expansion plans.