Monzo has raised $190m (£150m) in new funding, taking its total for the year to $610m (£488m) and raising its valuation to $5.2bn (£4.1bn), as the digital bank eyes up international expansion and a flurry of new products.
The latest funding comes from new investors including Hedosophia, an early investor in Airbnb and Uber, as well as existing backers like CapitalG, the independent growth fund of Google’s parent company Alphabet.
Singaporean sovereign wealth fund GIC is also reported to have participated in the fundraising. GIC declined to comment.
The news comes just two months after Monzo secured a $430m (£340m) funding round led by CapitalG that boosted its valuation to $5bn (£3.9bn), from $4.5bn (£3.5bn) in 2021.
The bank has exploded in popularity since it was founded eight years ago to become one of the UK’s most successful start-ups and a serious challenger to the country’s biggest lenders. Monzo now boasts more than nine million UK customers, adding two million last year alone.
Monzo, which hit monthly profitability towards the end of 2023, expects to post its first annual profit this year. It reported a £116m pretax loss last year, driven by higher loan loss impairments from its buy-now-pay-later offering.
It plans to use the new capital to accelerate its international expansion and build new products. Chief executive TS Anil told CNBC that Monzo was preparing to launch its first pensions product in the next six to nine months, which would put it in direct competition with the likes of Barclays and Natwest.
Anil said Monzo was also in the early stages of exploring partnerships with lenders to offer a mortgage product that would further boost competition with major retail banks.
Monzo is plotting a return to the American market, hiring former Cash App product head Conor Walsh as its new US chief executive last October. In 2021, US regulators told Monzo, which is a fully licenced bank in the UK, that it was unlikely to secure a licence there after two years of negotiations.
The firm has since focused on partnering with banks that are licenced in the US to bypass the requirements. It is also considering expanding into Europe but has not yet announced any formal plans.
“The huge interest we see from global investors is testament to the momentum and strength of our business model and the commitment of our teams, who put our customers at the heart of everything we do,” Anil said on Wednesday.
“With even more rocket fuel for our ambitions and exciting products in the pipeline, there’s no doubt in my mind that the best of Monzo is yet to come.”
News of the valuation uplift comes amid expectations that Monzo will eventually launch a blockbuster public listing in London or New York.
Anil has repeatedly said the firm will make a “great public company one day” but has been tight-lipped about the timing or location of a potential IPO, saying it is too early to discuss.