Digital bank Monzo, which is based in the United Kingdom, on Tuesday, March 5, announced that it had managed to raise new capital for $430 million from investors.
The virtual financial institution intends to use the funds received to implement efforts to resume operations in the United States.
The digital bank raised $430 million in capital as part of a funding round led by CapitalG, the independent venture capital unit of Google’s parent company Alphabet. HongShan, a Chinese venture capital firm that split from Sequoia Capital last year, also backed the round, along with existing backers Tencent and Passion Capital.
Monzo is currently one of the most popular banks in the United Kingdom. A digital financial institution only works with apps. Monzo representatives said that the new capital will be used to accelerate business scaling plans.
TS Anil, CEO of the virtual bank, said during a conversation with media representatives that the received financing will allow the digital lender to crack the United States market. Monzo’s previous attempt to start a business in the US was thwarted by local regulators.
TS Anil says that financial support from global investors provides the digital lender with opportunities to harder and faster realize its ambitions. In this context, he noted Monzo’s desire to become a single app that is central to the financial lives of customers. According to him, each previous stage passed by the virtual bank gave more strength and speed to realize the mission of the digital lender. He stated that the new funding will allow Monzo to reach new heights and take advantage of additional opportunities.
Neobank is currently on a trajectory of rapid growth. The revenue of the virtual financial institution for 2023 amounted to 355.6 million pounds ($451.9 million). A similar figure for 2022 was recorded at the level of 154.2 million pounds.
Monzo tried to launch its business in the United States in 2019. At that time, the digital lender released a beta version of its digital product for American consumers. The virtual financial institution operated in the US as part of a partnership with the community bank Sutton Bank.
Monzo sought to obtain a banking license in the United States. The digital lender abandoned these efforts in 2021 after two years of unsuccessful negotiations with US regulators. Since then, Monzo has focused on preparing to re-launch the business in the United States. As part of the new planned but yet unknown partnership, the digital lender intends to bypass the requirement to obtain a banking license necessary to serve American customers.
Last year, a virtual financial institution began searching for a CEO in the United States. In October, Monzo hired the former head of the unit Cash App of the fintech company Block.
Also last year, the digital bank engaged in investment products for the first time. The virtual lender has launched investment packages that allow customers to park cash in various funds managed by BlackRock.
Monzo currently serves over 9 million retail customers in the United Kingdom. Last year, the number of the virtual financial institution’s customer base increased by 2 million people. Monzo also serves 400,000 business banking clients.
As we have reported earlier, Monzo Aims for £4 Billion Valuation.
