British neobank Monzo announced Wednesday that it has raised an additional $190 million, bringing the total it has raised so far this year to $610 million.
The company told CNBC that it received the money from new investors, including Hedosophia, a backer of top European fintechs such as N26 and Qonto. CapitalG, Alphabet’s independent growth fund, also participated in the round.
Singaporean sovereign wealth fund GIC also participated in Monzo’s recent fundraising campaign, a source familiar with the matter told CNBC. The source spoke on condition of anonymity because details of GIC’s involvement are not yet public.
GIC declined to comment.
The latest funding values Monzo at around $5.2 billion, an increase from the $5 billion valuation the company reached in March when it raised $430 million. The total funding round of $610 million is the largest single funding round for a European fintech in the past year, according to Dealroom data.
Monzo CEO TS Anil told CNBC that his company plans to use the money to develop new products and accelerate its international expansion plans.
“At our core, we are a mission-driven company that wants to create the only place where people can get all of their financial needs met,” Anil told CNBC in an exclusive interview.
“What excites me is that in pursuing our mission to transform people’s relationship with money, we have developed a business model that is consistent with that, with a model that is completely customer-centered.”
Monzo was in the black for the first time last year and reached profitability at the end of the 2023 financial year. Anil said Monzo wanted to increase its profits by diversifying into other sources of income such as loans and savings.
Specifically, Anil said Monzo plans to launch its first retirement product in the next six to nine months.
That would put it in competition with traditional lenders Barclays and NatWest. Last year, NatWest acquired 85% of British occupational pensions provider Cushon for 144 million pounds ($180 million).
Global expansion plans
Monzo’s funding expansion caps a busy year for the nine-year-old company, which now has more than 9 million retail customers in the UK – 2 million of whom joined Monzo last year alone – and over 400,000 business customers.
Last year, Monzo made its first foray into the investment industry with a feature that allows customers to invest in funds managed by BlackRock.
Anil said Monzo found that around a third of people using the service had never invested before – and even more strikingly, 45% of women investing through the Monzo app were first-time investors.
Another big priority for Monzo in the coming months is international expansion.
The company recently restarted its U.S. expansion efforts, hiring a longtime executive from Block’s Cash App as its new U.S. CEO after previously abandoning a bid from U.S. regulators to acquire a banking license.
Currently, Anil said, Monzo’s team in the US is primarily focused on products, ensuring that the service there is of sufficient quality to compete with large incumbents like these JP Morgan And Citibank.
The US has proven notoriously difficult for European neobanks to crack.
The Berlin digital bank N26 withdrew from the USA in particular in 2021.
Revolut, meanwhile, has not yet managed to formally submit an application for a US banking license, despite previously stating that it intends to submit a draft application for a US banking license.
“What I like about our approach to this is that at its core, it’s not just about words,” Anil said in an exclusive interview with CNBC on Tuesday.
“For us, the necessary prerequisite for the US is to get the product right. That’s why we invest our time and effort there.”
European expansion is also planned, Anil said, although he hasn’t committed to a date for it.
Mortgages are coming
Longer term, Monzo also plans to launch a mortgage product, which would see it compete much more aggressively with UK retail banks in the world of lending.
Monzo currently offers monthly installment payments and consumer loans through its app.
It also has a “Mortgage Tracker” feature that allows users to track how much they have paid on their mortgage and how much equity they have built up.
But it has yet to officially launch a service that would allow people to apply for mortgages directly in the app.
Anil said Monzo was in the early stages of seeking partnerships with lenders to offer this.
He declined to name possible partners.
One thing Monzo has no immediate plans for is an IPO.
Although he believes Monzo will one day become a “great listed company”, Anil said it is still too early to talk about an IPO. He says he is focused on growing Monzo at scale before reaching that milestone.
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2024-05-08 09:24:35
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