British neobank Monzo announced Wednesday that it has raised an additional $190 million, bringing its total raised so far this year to $610 million.
The company told CNBC it has raised cash from new investors including Hedosophia, a backer of top European fintech companies such as N26 and Qonto. CapitalG, Alphabet’s independent growth fund, also participated in the round.
Sources told CNBC that Singapore’s sovereign wealth fund GIC also participated in Monzo’s latest financing. The person spoke on condition of anonymity because details of GIC’s involvement have not yet been made public.
GIC declined to comment.
The latest round of funding values ​​Monzo at about $5.2 billion, up from the $5 billion valuation it reached when it raised $430 million in March. The funding round, totaling $610 million, was the largest funding round for a European fintech company in the past year, according to Dealroom data.
Monzo CEO TS Anil told CNBC that the company plans to use the funds to develop new products and accelerate its international expansion plans.
“Essentially, we’re a mission-driven company and we’re trying to build a single place where people can meet all their financial needs,” Anil told CNBC in an exclusive interview.
“What’s interesting to me is that in pursuing our mission to change people’s relationship with money, we’ve built a business model to match that, with a model built entirely around the customer.”
Monzo turned profitable for the first time last year and will return to profitability at the end of the 2023 financial year. Anil said Monzo is looking to increase profits by diversifying into other sources of income, such as loans and savings.
Notably, Anil said Monzo plans to launch its first annuity product within the next six to nine months.
This will put them in competition with traditional lenders, including: barclays and NatWest. Last year, NatWest acquired 85% of British workplace pension service company Kussion for £144 million ($180 million).
Global expansion plan
Monzo’s funding expansion caps off a busy year for the nine-year-old company, which now counts more than nine million retail customers in the UK, two million of whom switched to Monzo last year alone. The number of corporate customers now exceeds 400,000.
Last year, Monzo made its first foray into investing with the ability to invest in customer-managed funds. black rock.
Anil said Monzo has identified that around a third of people using the service have never invested before, and more importantly, through the Monzo app, We found that 45% of women investing are 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 Block’s Cash Up executive as its new U.S. CEO after previously abandoning its bid to obtain a banking license from U.S. regulators. ).
For now, Anil said, Monzo’s team in the U.S. is primarily focused on the product and making sure the service is of a high enough quality to compete with large incumbents such as . JP Morgan and citibank.
The US has proven notoriously difficult for European neobanks to break through.
Berlin-based digital bank N26 is notable for withdrawing from the US in 2021.
Meanwhile, Revolut has not yet formally submitted its application for a U.S. banking license, despite previously indicating its intention to submit a draft application.
“What I love about the way we’re approaching this is that at the heart of it, it’s not just words,” Anil told CNBC in an exclusive interview Tuesday.
“For us, what we need in the U.S. is to have the right product. That’s where we’re spending our time and effort.”
Anil said plans also included expansion in Europe, but he declined to say when that would happen.
mortgage is coming
In the longer term, Monzo also plans to launch a mortgage product, which will see it compete more aggressively with UK retail banks in the lending world.
Monzo currently offers monthly installment plans and consumer loans through its app.
There’s also a “mortgage tracker” feature that allows users to track how much they’ve paid for their mortgage and how much equity they’ve built.
However, the company has not yet officially rolled out a service that allows users to apply for a mortgage directly within the app.
Anil said Monzo is in the early stages of exploring partnerships with lenders to offer this.
He did not disclose the name of his future partner.
One thing Monzo doesn’t have immediate plans for is an initial public offering (IPO).
Anil believes Monzo will one day build a “great public company” but said it’s too early to talk about an IPO. He said he is focused on growing Monzo at scale before reaching that milestone.
