Digital bank Monzo is poised to shake up the mobile phone market with the introduction of a new plan designed to reward customer loyalty through progressively cheaper tariffs.
Customers of the popular digital bank, which boasts over 15 million users, can now register their interest for the mobile service.
Built upon the Virgin O2 network, the offering is slated for a full rollout this summer. Monzo’s foray is expected to intensify competition within the telecoms sector, which has already seen disruption from newer entrants like Revolut and Klarna.
The bank asserts its new phone plan directly challenges the traditional mobile model by offering incentives for long-term commitment, rather than penalising it.
Subscribers will receive a 5 per cent discount on their monthly bill each year, potentially accumulating a saving of up to 30 per cent over time.
The service will offer three digital SIM plans with varying data allowances, priced at £8, £12, and £20 per month. This move comes as new regulations, effective since 2025, have tightened controls on phone and broadband providers increasing prices mid-contract without prior warning.
But some firms have continued to come under fire for effectively penalising loyal customers with inflation-linked mid-contract price rises, with Chancellor Rachel Reeves writing to bosses last year to demand more protection for consumers.
Like other new providers, Monzo aims to circumnavigate the issue of mid-contract price rises by designing plans that do not tie people in for a year and do not charge an exit fee – but that does not mean it cannot raise the prices of its plans at any time.
In the UK, only four providers operate their own network infrastructure – EE, Virgin Media O2, and Vodafone and Three.
But numerous smaller providers, known as virtual networks, piggyback off their signals – with Monzo using the Virgin Media O2 network for its service.
Financial firm Revolut began rolling out a phone plan earlier this year which runs on the Vodafone network, and offers unlimited 5G, calls and texts in the UK for £12.50 a month.
Monzo has recently reported a 44 per cent leap in its annual profits as the digital bank generated more from lending and cashed in on subscriptions.
The bank, which was launched 11 years ago as a challenger to high street banking, said millions more customers joined in the past year.
It reported a pre-tax profit of £87.3 million for the year to the end of March, up 44 per cent on the £60.5 million made the year before.
Total revenues jumped by 39 per cent to £1.7 billion, partly driven by a 39 per cent year-on-year increase in lending income.
