Monzo may see valuation hit £2bn after fresh US backing

By Roger Baird on 8th April 2019

Challenger Banks

The move will see the bank become the UK’s second biggest fintech start up, overtaking rival Revolut.

Monzo may see valuation hit £2bn after fresh US backing

Monzo is close to raising another round of fresh funding that will value the digital bank at £1.9bn, making it the UK’s second biggest fintech start up.

The challenger bank, which has amassed 1.5 million customers since its launch in 2015, is close to clinching £100m of funding from an unnamed US backer.

If Monzo secures this fresh cash from investors it will jump ahead of rival digital bank Revolut, founded four years ago, which has 1.8 million monthly active users and was valued at $1.7bn at its most recent fundraising a year ago, according to The Sunday Times.

Monzo’s impending cash call comes hard on the heels of two recent rounds of funding. In December, it secured £20m in two days from 36,000 investors through a crowdfunding programme. And in October, the bank raised £85m from institutional backers, led by American venture capital groups General Catalyst and Accel.  

Both Monzo and Revolut trail business challenger bank OakNorth, which hit a $2.8bn valuation following a $440m funding round led by Japanese conglomerate SoftBank in February.

Challenger banks, with lean staffs and cutting-edge lending algorithms, are able to attract investor cash in the hope they will break the dominance of high street operators. However, the UK’s big four banks — Barclays, HSBC, Lloyds and RBS — still control around three-quarters of the current account market

Monzo, led by chief executive Tom Blomfield (pictured), is popular with millenials under 40, with the bank claiming it adds 28,000 new customers a week.

Earlier this month, it emerged the bank is testing a new £11-a-month premium account, called Monzo Plus, allowing customers its cards in colours other than its famous ‘hot coral’ colour.

The account includes a number of features such as free travel insurance as well as an ‘emergency money’ feature allowing customers to access up to £1000 in local currency if you lose your card or it’s stolen.  New colours for cards include ‘lagoon blue’ and ‘midnight sky’.

However, most digital banks, apart from profitable OakNorth, are loss-making. Monzo saw its annual pre-tax loss leap fourfold to £33.1m last year.

Monzo did not respond to an interview request.

AltFi Toronto Summit 2019

AltFi is coming back to Toronto following on from a highly successful event last year. We'll again be bringing a high profile international showcase of speakers from the leading fintech and alternative finance leaders.

11th December 2019


Companies in this Article:

Monzo
OakNorth
RBS
Revolut
Barclays

People in this Article:

More like this:

Revolut makes pensions push

6th December 2019
Daniel Lanyon

Metro Bank CEO stands down

9th December 2019
John Reynolds

Starling Bank Review - April 2019

12th April 2019
Oliver Smith