Monzo's new funding round rises valuation to USD 5 bln

Tuesday 5 March 2024 15:42 CET | News

UK-based digital bank Monzo has raised USD 431.26 million at a USD 5.07 billion valuation to expand and introduce new products.


The digital bank’s funding round was led by CapitalG, a fund owned by Google-owner Alphabet (GOOGL.O), and included investment from GV (Google Ventures) and Chinese venture capital firm HongShan Capital.


Monzo has raised USD 431.26 million at a USD 5.07 billion valuation to expand and introduce new products.


Relaunching in the US

A fair portion of the cash will be allocated toward helping Monzo relaunch its services in the US. The neobank previously tried launching in the country in 2019, with a beta product available for American consumers. The company was live in America via a partnership with the community bank Sutton Bank.

Monzo wanted to acquire a full US bank license, but it was forced to abandon this plan in 2021 after a fruitless two-year discourse with regulatory authorities. It has since opted to focus on re-entering the US with a partnership that would allow it to bypass the requirement of getting a full bank license to serve US customers.

Monzo’s new round also comes after a focus on new products for the bank. Monzo made its first foray into investment products in 2023, launching investment pots that allow customers to park their cash at a range of funds managed by BlackRock with different levels of risk.

Monzo said it now has more than 9 million retail customers in the U.K., and that it added 2 million of those clients in 2023 alone. The company also has 400,000 business banking customers.

Previous developments from Monzo

In July 2023, Monzo has considered a merger with Denmark-based fintech Lunar. The potential collaboration aimed to explore the synergies between the two companies and their impact on the global fintech landscape. 

Monzo has garnered significant traction in the UK, challenging traditional banking models with innovative features. Lunar, on the other hand, operates as a digital bank in the Nordic region, focusing on providing personalised financial solutions. A merger could have enabled both entities to leverage each other's strengths, expand into new markets, and offer users access to a broader range of financial products and services.

In February 2023, the Monzo has introduced its first instant access savings pot offering a competitive 3% interest rate. The service included no minimum deposit requirement and integrates seamlessly with the bank's existing budgeting features such as Savings Pots and Salary Sorter.

Developed with customer feedback, the savings pot aims to provide flexibility for users to grow and access their funds conveniently. This addition complements Monzo's existing easy access and fixed-term savings options, including a 3.55% interest rate on its 12-month fixed option. The announcement highlights Monzo's competitive stance in the savings market, aligning with similar products launched by JP Morgan Chase.

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Keywords: neobanks, banking, digital banking, expansion, funding
Categories: Banking & Fintech
Companies: Monzo
Countries: United Kingdom, United States
This article is part of category

Banking & Fintech


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