Monzo, a London-based digital bank, has raised £113m in new funding as of this week, bringing the firm’s total valuation to £2 billion at the early outset of its expansion into the U.S. The funding round was led by Y Combinator through its Continuity Fund.
Monzo’s major offering to customers is fully-digital banking services; users can open and manage their accounts entirely via a smartphone app. The bank employs about 1,000 people to serve a customer base that is growing by 200,000 new customers per month. As of this latest round, Monzo has collected around £300m in total funds.
Tristan Thomas, Monzo’s head of marketing, noted that an American investor coming on board at the time of their American expansion is a coincidence — but a welcome one, since Y Combinator “is almost the holy grail of technology investing.”
“The fact of the matter now is that when we’re raising these very large rounds, most of the time that involves U.S. investors,” he said to the Guardian.
The British FinTech sector is “really heating up as we go from an interesting niche area of challenger banks to something where some of us are really competing against traditional banks at scale,” Thomas continued.
And those traditional banks are gearing up to begin competing right back at scale, as they are realizing that Monzo and its digital fellows are beginning to put a dent in their core businesses.
RBS, for example, is currently developing its own new banking app, Bó, for a late 2019 debut.
But it will have to catch Mozo, which is reportedly on track to have three million customers by the end of this year.
And Monzo’s backers believe that it will take more than an app for traditional banks to catch up.
“Banking is archaic and needs to be drastically redesigned. Monzo is the first of its kind to redefine the modern banking experience for customers around the world,” Anu Hariharan, a partner at Y Combinator’s Continuity Fund, noted.