British neobank Monzo said on Wednesday it had raised another $190 million, bringing the total amount it has raised so far this year to $610 million.
The company told CNBC it has raised money from new investors including Hedosophia, and is a backer of the largest European fintech companies including 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.
The Gulf Investment Corporation declined to comment.
The latest funding values Monzo at about $5.2 billion, an increase from the $5 billion valuation it achieved in March when it raised $430 million. The $610 million total round represents the largest single European fintech funding round in the past year, according to Dealroom data.
Monzo CEO TS Anil told CNBC that his company plans to use the funds to build new products and accelerate international expansion plans.
“At its heart, we are a mission-driven company that looks to build a one-stop shop where people can get all their financial needs met,” Anil told CNBC in an exclusive interview.
“What's exciting to me is that, as we pursue a mission of changing people's relationship with money, we've built a business model that aligns with that as well, with that model built entirely around the customer.”
Monzo entered the black for the first time last year, achieving profitability after the end of fiscal 2023. Anil said Monzo is looking to increase profits by diversifying into other sources of income, such as lending and savings.
Notably, Anil said that Monzo plans to launch its first annuity product within the next six to nine months.
This would put it in competition with traditional lenders including… Barclays And NatWest. Last year, NatWest acquired an 85% stake in UK workplace retirement provider Cushon for £144 million ($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 UK retail customers – 2 million of whom joined Monzo last year alone – and more than 400,000 business customers.
Last year saw Monzo make its first foray into investments with a feature that allows customers to invest in funds it manages Black stone.
Anil said Monzo has identified that about a third of people using the service have never invested before — in particular, 45% of women who invest via the Monzo app are first-time investors.
Another big priority for Monzo in the coming months is international expansion.
The company recently resumed its US expansion efforts, appointing a long-time executive from Block's Cash App as its new US CEO after earlier abandoning a bid to obtain a banking license from US regulators.
Right now, Anil says, Monzo's US team is mainly focused on the product to ensure that the service it offers there is of high enough quality that it can compete with major companies such as JP Morgan And Citibank.
The United States has proven extremely difficult to penetrate European neobanks.
Berlin-based digital bank N26 notably pulled out of the US in 2021.
Meanwhile, Revolut has failed to submit a formal application for a US banking charter, despite earlier announcing that it intends to submit a draft application for a US banking licence.
“What I like about the way we're handling this is that at the core it's not just words,” Anil told CNBC in an exclusive interview on Tuesday.
“The necessary conditions for the United States for us are getting the right product. That's what we spend our time and effort there.”
European expansion is also on the table, Anil said, though he did not commit to when that would happen.
Mortgages are coming
In the longer term, Monzo also plans to launch a mortgage product, which would see it compete more aggressively with UK retail banks in the lending world.
Monzo currently offers monthly installment plans and consumer loans via its app.
It also has a “Mortgage Tracker” feature that allows users to track how much they have paid for their mortgage and how much equity they have built.
But it has not yet officially launched a service that allows people to apply for mortgages directly through its app.
Monzo is in the early stages of exploring partnerships with lenders to offer this, Anil said.
He declined to name any potential partners.
One thing Monzo doesn't have any immediate plans for is an IPO.
Although he believes Monzo will be a “great public company one day,” Anil said it is still too early to talk about an IPO. He says he is focused on growing Monzo extensively before reaching this milestone.
