UK challenger bank Monzo eyes $1.5bn valuation
UK challenger bank Monzo is set for more fundraising as it seeks to reach the giddy heights of a $1.5 billion valuation.
Monzo journalism
The bank will more than quadruple its $356 million valuation in its last fundraising in November 2017, according to two people familiar with the talks who spoke with the FT.
Its latest funding round, which includes Silicon Valley-based venture capital group Accel Partners, is expected to be announced before the end of the year.
Tom Blomfield, Monzo’s chief executive, did not comment on the fundraising, but says: “Our investors are totally aligned with our plan and completely comfortable that we are not looking to break even this year or next.”
As we reported last month, Monzo’s pre-tax losses more than quadrupled to £33.1 million.
In its annual report 2018, figures for its past financial year show customer deposits were £71.2 million, equating to less than £150 per account.
But it did treble its user numbers to 750,000 over the year. In addition, customers spent more than £2 billion through Monzo, and the bank’s headcount has reached 300.
The FT reckons the new funds are expected to be used to expand Monzo’s product range, including plans to launch short-term unsecured loans or to offer high-interest savings accounts via a third party.
As revealed on 27 July, Monzo confirmed to FinTech Futures that its joint accounts were currently being tested and they would be rolling out “soon”. It went official with this news three days ago.
Monzo will have many rivals as the UK market is more packed than London’s trains in the rush hour. Starling has been one of the more active, but our comprehensive UK challenger bank list is here.
Blomfield told the FT that it plans to increase its lending from 5% to about 10% of its deposit base, still well below the 100%+ of many traditional lenders.
According to Monzo, a fifth of its 870,000 current account holders are paying their salaries into their accounts. This figure is a big jump from last month (and mentioned above) of 750,000.
Blomfield explains that more than 45% of its customers were putting at least £500 a month into their accounts and this was “growing rapidly”.
Longer term, he told the FT that its main revenue stream would be commissions from helping customers to manage their money better, such as by switching their savings to a higher interest account or suggesting a cheaper provider of gas, electricity or broadband.
“We are trying to build a control centre or dashboard for your financial world,” he says.
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