British neobank Monzo said on Wednesday it had raised another $190 million, bringing its total raised so far this year to $610 million.
The company told CNBC that it raised the money from new investors, including Hedosophia, a backer of leading European fintech companies including N26 and Qonto. CapitalG, Alphabet’s independent growth fund, also participated in the round.
Singapore sovereign wealth fund GIC also participated in Monzo’s latest fundraising, 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 roughly $5.2 billion, up from the $5 billion valuation it hit in March when it raised $430 million. The total round of $610 million marks the largest funding round for a European fintech in the past year, according to data from Dealroom.
TS Anil, CEO of Monzo, told CNBC that his company plans to use the money to create new products and accelerate its international expansion plans.
“At our core, we are a mission-driven company that strives to build the one place where people can meet all their financial needs,” Anil told CNBC in an exclusive interview.
“What’s exciting to me is that as we pursue this mission to change people’s relationship with money, we’ve built a business model that aligns with that, with this model that’s built entirely around the customer.”
Monzo went black for the first time last year, achieving profitability after the end of its 2023 fiscal year. Anil said Monzo wants to increase its earnings by diversifying into other sources of income, such as loans and savings.
In particular, Anil said Monzo plans to launch its first pension product in the next six to nine months.
This would put it in competition with traditional lenders including Barclays and NatWest. Last year, NatWest acquired 85% of UK workplace pension provider Cushon for £144 million ($180 million).
Global expansion plans
Monzo’s funding expansion caps a busy year for the nine-year-old firm, which now has more than 9 million UK retail customers – 2 million of whom joined Monzo last year alone – and over 400,000 business customers.
Last year I saw Monzo do their thing first investment experience with a feature allowing clients to invest in funds managed by Black stone.
Anil said Monzo has found that about a third of people using the service have never invested before – and in particular, 45% of women investing through the Monzo app are first-time investors.
Another big priority for Monzo in the coming months is international expansion.
The company recently renewed its US expansion efforts, hiring a longtime executive from Block’s Cash App as its new US CEO after earlier abandoning an attempt to acquire a banking license from US regulators.
For now, Anil says, Monzo’s US team is focusing primarily on products to ensure the service it offers there is of high enough quality to compete with major incumbents such as JPMorgan and Citibank.
The US has proven extremely difficult to crack down on European neo-banks.
Berlin-based digital bank N26 notably pulled out of the US in 2021.
Meanwhile, Revolut has failed to file a formal application for a US banking charter, although it previously said it intended to submit a draft application for a US banking license.
“What I like about the way we approach this is that at the heart of it, it’s not just words,” Anil told CNBC in an exclusive interview on Tuesday.
“The US prerequisite for us is to get the product right. That’s what we spend our time and effort on there.”
Expansion into Europe is also on the cards, Anil said, although he did not commit to a date when that would happen.
Mortgages are coming
In the longer term, Monzo also plans to launch a mortgage product that will see it compete much more aggressively with UK retail banks in the world of lending.
Monzo currently offers monthly installment plans and consumer loans through its app.
It also has a “Mortgage Tracker” feature that allows users to track how much they’ve paid on their mortgage and how much equity they’ve built up.
But it is yet to officially launch a service that will allow people to apply for mortgages directly in the app.
Anil said Monzo is in the early stages of exploring partnerships with lenders to offer this.
He declined to name potential partners.
One thing Monzo has no immediate plans for is an initial public offering.
While he thinks Monzo will make a “great public company one day,” Anil said it’s still too early to talk about an IPO. He says he focused on growing Monzo to scale before reaching this milestone.
https://www.cnbc.com/2024/05/08/monzo-boosts-funding-to-610-million-to-crack-us-launch-uk-pensions.html
