British neobank Monzo said on Wednesday it had raised an additional $190 million, bringing its year-to-date total to $610 million.
The company told CNBC it 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.
Singapore’s sovereign wealth fund GIC also participated in Monzo’s latest financing, a person familiar with the matter told CNBC. The sources requested anonymity because details of GIC’s involvement have not been made public.
GIC declined to comment.
The latest financing values Monzo at about $5.2 billion, an increase from the $5 billion valuation it reached in March when it raised $430 million. The round, which totaled $610 million, was the largest single funding round for a European fintech company last year, according to Dealroom data.
Monzo CEO and co-founder TS Anil told CNBC that his company plans to use the cash to develop new products and accelerate its international expansion plans.
“At our core, we are a mission-driven company that wants to build a single place that can serve all of people’s financial needs,” Anil told CNBC in an exclusive interview.
“I’m excited that as we pursue our mission to transform people’s relationship with money, we’ve built a business model that aligns with it and that’s built entirely around the customer.”
Monzo made a profit for the first time last year and ended the 2023 financial year with two consecutive months of profits. Anil said Monzo hopes to increase profits by diversifying into other sources of income, such as loans and savings.
Notably, Anil said Monzo plans to launch its first pension product within the next six to nine months.
This will make it competitive with traditional lenders, including barclays bank and National Westminster Bank. Last year, NatWest acquired an 85% stake in UK workplace pension services provider Cushon for £144 million ($180 million).
global expansion plans
Monzo’s funding expansion caps a busy year for the nine-year-old company. client.
Last year, Monzo found success Entering the investment field for the first time, allowing customers to invest in black stone.
Anil said Monzo found that about a third of people using the service had never invested before, and more notably, 45% of women who invested through the Monzo app were first-time investors.
Another priority for Monzo in the coming months is international expansion.
The company recently relaunched its U.S. expansion plans, hiring a longtime Block’s Cash App executive as its new U.S. CEO after earlier abandoning its bid to obtain a banking license from U.S. regulators.
Anil said Monzo’s team in the US is currently focused on product to ensure that the service it provides is of high enough quality to compete with major incumbents such as JPMorgan and Citibank.
The U.S. market has proven difficult for European neobanks to crack.
Berlin-based digital bank N26 exits the United States in 2021.
Revolut, meanwhile, has yet to formally submit an application for a U.S. banking license, despite earlier saying it intended to submit a draft application for one.
“I like the way we’re dealing with this, and essentially it’s not just words,” Anil told CNBC in an exclusive interview on Tuesday.
“For us, the imperative to get into the U.S. is to have the right product. That’s why we spend our time and energy there.”
Anil said European expansion was also a possibility, but he did not commit to a specific date.
The mortgage is coming
In the longer term, Monzo also plans to launch a mortgage product, which would allow it to compete more aggressively with UK retail banks in 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 pay on their mortgage and how much equity they build.
But it has yet to officially launch a service that would allow people to apply for a mortgage directly within its app.
Anil said Monzo is in the early stages of exploring partnerships with lenders to offer this service.
He declined to name any potential partners.
One thing Monzo doesn’t have any immediate plans for is an initial public offering.
While Anil believes Monzo will be “a great public company,” he says it’s too early to talk about an IPO. He said that before reaching this milestone, his focus is on growing Monzo at scale.
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