British neobank Monzo said on Wednesday it has raised another $190 million, raising its total raised this year to $610 million.
The company told CNBC it has raised money from new investors including Hedosophia, a backer of leading European fintech companies including N26 and Qonto. CapitalG, Alphabet’s independent growth fund, also participated in the round.
Singapore sovereign wealth fund GIC also participated in Monzo’s latest fundraising, a source familiar with the matter told CNBC. The source spoke on condition of anonymity because details of GIC’s involvement have not yet been disclosed.
GIC declined to comment.
The latest figures value Monzo at around $5.2 billion, up from the $5 billion valuation it reached in March when it raised $430 million. The total funding round of $610 million was the largest funding round for a European fintech project in the past year, according to Dealroom.
T.S. Anil, Monzo’s CEO, told CNBC that his firm plans to use the cash to create new products and accelerate its international expansion plans.
“At our core, we are a mission-driven company that strives to create a single place where people can meet all their financial needs,” Anil told CNBC in an exclusive interview.
“What excites me is that in our mission to change people’s relationship with money, we’ve created a business model that does that as well, and that model is completely built around the customer.”
Monzo turned profitable for the first time last year, reaching profitability after the end of its 2023 financial year. Anil said Monzo is looking to grow profits by diversifying into other sources of income such as lending and savings.
Notably, Anil said Monzo plans to launch its first pension product in the next six to nine months.
This will put it in competition with traditional lenders, including Barclays and NatWest. Last year, NatWest acquired 85% of UK pensions provider Cushon for £144 million ($180 million).
Global expansion plans
Monzo’s funding expansion caps a busy year for the nine-year-old firm, which now has more than 9 million retail customers in the UK (2 million of whom joined Monzo last year alone) and more than 400,000 business customers.
Monzo launched investing for the first time last year with a feature allowing customers to invest in funds managed by BlackRock.
Anil said Monzo found that about a third of people using the service had never invested before and, more importantly, 45% of women investing through the Monzo app were first-time investors.
Another major priority for Monzo in the coming months is international expansion.
The company recently renewed its U.S. expansion efforts by hiring a longtime Block’s Cash App executive as its new U.S. CEO after previously abandoning its application for a banking license from U.S. regulators.
For now, Anil says Monzo’s team in the US is primarily focusing on products to ensure that the services provided there are of high enough quality to enable them to compete with big players like J.P. Morgan And Citibank.
As you know, European neobanks have had a hard time cracking the US.
Berlin-based digital bank N26 has made a notable exit from the US in 2021.
Meanwhile, Revolut has failed to formally apply for a US banking license, despite previously saying it intended to file a draft application for a US banking license.
“What I like about the way we’re approaching this is that it’s essentially not just words,” Anil told CNBC in an exclusive interview on Tuesday.
“The prerequisite for us in the US is to get the right product. This is where we spend our time and effort.”
European expansion is also on the horizon, Anil said, although he did not give a date for when that will happen.
Mortgage is coming
Longer term, Monzo also plans to launch a mortgage product that will allow it to compete more aggressively with UK retail banks in the world of lending.
Monzo currently offers monthly installments and personal loans through its app.
It also has a Mortgage Tracker feature that allows users to track how much they’ve paid on their mortgage and how much equity they’ve built up.
But the company has yet to officially introduce a service that would allow people to apply for mortgages directly within its app.
Anil said Monzo is in the early stages of exploring partnerships with lenders who could offer this.
He declined to name any potential partners.
The only thing Monzo has no immediate plans for is an initial public offering.
While he believes Monzo will one day be a “great public company”, Anil said it was too early to talk about an IPO. He says he was focused on growing Monzo at scale before reaching this milestone.