Challenger banks raise record capital in Q1

By Daniel Lanyon on Friday 29 June 2018

Editor's PickDigital Banking

More than $2.8bn has been raised by challenger banks globally since 2014 following a record level in the first three months of 2018.

Challenger banks raise record capital in Q1
Image source:

Banking disruptors have raised a record level of funding in the first three months of 2018, according to consultancy Fintech Global, having clocked up $745m of investors' cash.

Deal activity in the industry grew from 21 transactions in 2014 to 35 last year, with capital invested increasing 7x over the same period. The average deal size grew from $7.2m in 2014 to $31.8m last year.

More than two-thirds - 67 per cent - of the total capital raised by challenger banks globally last year has already been raised in Q1 2018, suggesting this year could likely also be a record.

The 10 largest investments in Challenger Banks between 2014 and Q1 2018 raised over $1.2bn. The UK has some of the most well-funded Challenger Banks with Atom Bank, Starling Bank, OakNorth, Monzo, Tandem Bank and Revolut all having raised over $1bn combined.

UK-based Atom Bank raised £149m of venture funding from BBVA and Toscafund Asset Management in Q1 2018. Since inception, Atom Bank has raised over £379m and also has lent out more than £1.2bn.

The the largest single investment in a challenger bank to date goes to Oaknorth in September last year. Oaknorth raised £154m from Toscafund, Coltrane and Clermont Group in a primary round, with a further £90m from GIC in a secondary round which closed in October. A total of £244m.

N26, a Berlin-based Challenger Bank, raised $160m in Series C funding from Allianz X and Tencent Holdings in Q1 2018.

Europe, specifically the UK has been a hotspot with European challenger banks having claimed more than half of the deal activity 57 per cent in the space since 2014.


Sign up for our newsletters

Your daily 7am download of all things alternative finance and fintech.

Fintech and alternative finance headlines with an exclusive Editor's Note each week. Delivered Monday at midday.