Lunar’s Push for Profitability
Last year, Lunar, the Nordic neobank valued at $2.2bn, focused on achieving profitability amidst challenging funding conditions. While many fintech unicorns in Europe have not yet pursued M&A as part of their growth strategy, Lunar was rumored to be exploring a merger with UK-based neobank Monzo. Ken Villum Klausen, CEO of Lunar, praised Monzo’s CEO, TS Anil, and acknowledged the discussions happening in the market. However, he clarified that Lunar is not actively seeking to be acquired. Lunar previously attempted to acquire Nordic rival Instabank in 2022, but the deal fell through due to lack of regulatory approval.
The Search for an European Champion
Villum Klausen highlighted that the European challenger bank landscape has yet to see the emergence of a European champion. While regional champions exist, there has not been a neobank that competes against incumbents on a European scale. Lunar, with its banking license issued by the Danish FSA, has focused on becoming a regional champion in the Nordic region. The Nordic market is profitable and characterized by strong customer loyalty and limited competition. Despite the oligopolistic nature of the market, Lunar has differentiated itself by building its own infrastructure rails connected to the payments clearing system in Denmark, Sweden, and Norway.
Path to Profitability and Revenue Growth
Lunar has been working towards long-term profitability and aims to achieve monthly break-even in early 2024. The neobank has accelerated its path to profitability and experienced revenue growth through several strategies. Lunar has expanded into business accounts, with around 50% of newly established businesses in Denmark applying for a Lunar account. Additionally, the introduction of subscription-based plans for consumers has gained significant traction, with nearly a third of all customers choosing a paid plan at sign-up. The neobank offers a wide range of products, including lending, savings, wealth management, stock trading, and crypto. Lunar has also ventured into platform-based banking services, collaborating with partners like Trustly for Nordic payments and pay-outs, which has experienced tremendous growth in the last six months.
Expansion Plans and Potential Acquisition
Lunar is planning for a new funding round and preparing for a launch into Finland to further establish its presence in the Nordic market. With its sights set on a 10% market share in the Nordic region, Lunar also sees Finland as a stepping stone for expansion into Germany. The neobank takes a country-by-country approach to European expansion, prioritizing dominant market presence in each country before pursuing the next. While the potential merger with Monzo remains uncertain, Lunar continues to explore opportunities for growth and collaboration in the evolving fintech landscape.