Space for one more? The UK's digital banking scene might just be heating up once more.
Kroo, a UK fintech aiming to win a bank license, has raised £17.7m in its Series A funding round as it looks to secure a banking license.
Launched in February 2019, the firm is initially offering a prepaid debit card.
The new funding will support its 'mobilisation phase', its says, ahead of its launch in early 2022. It is also looking to grow its team as it works towards securing a full banking license.
Andrea de Gottardo, Kroo’s CEO, told AltFi that he doesn’t agree with some of the common consensus that the UK neo banking space is a crowded market.
“There is a feeling that the digital banking market is really crowded but when you actually analyse the market dynamics, Monzo and Starling are the only two fully authorised digital banks that are offering a personal current account,” he said.
“There are a number of others that do not offer a personal current account but we really feel our competitors will be Monzo and Starling," he adds.
Revolut, which bills itself increasingly more as a ‘super app’ is also pursuing a UK banking license but has undoubtedly made most of international expansion and customer growth.
De Gottardo says Kroo will offer something different with the fintech differentiating itself from the UK giants of digital banking by building a bank more focused on ‘social features’, prompting groups to act together on financial matters.
“Monzo has bits and pieces of that but we are going way deeper,” he said.
It is currently offering one such deal, in a manner similar to Bunq, that when a customer successfully refers a friend Kroo plants 20 trees with the aim of creating a forest of 1 million trees.
“We’re helping each community of friends to build up their own forest but that is just the starting point with many other initiatives that will be leveraging the social good," he said.
In addition, he adds that it will further look to draw a line in the competitive space by appealing to peoples’ “social conscience” and will eventually donate a percentage of profits to social causes.
In pursing monetisation, he also says that the firm has learnt several lessons from early firms in the sector and will be pursuing a more traditional route to revenue growth via growing lending volumes.
The round was led by Rudy Karsan, an entrepreneur who sold HR platform Kenexa to IBM in 2012 and runs founder of Karlani Capital.
Karsan says: “The reason I’m excited about Kroo is that it has a concrete opportunity to dramatically change the way people feel about their bank, for good. Kroo has an exceptionally talented management team and a nimble tech stack that will enable the continuous delivery of banking features customers really care about. I’m confident Kroo is building a sustainable bank and am excited to support them on the next stage of their growth journey.”