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Monzo, the U.K. challenger, has more than a million customers, has raised £ 85 million in Series E funding. The round is led by U.S. Venture capital firm General Catalyst, and Accel. Existing backers Passion Capital, Goodwater, Thrive Capital, Orange Digital Ventures, and Stripe also participated.
The latest funding was at a pre-money valuation of £ 1 trillion (~ $ 1.27b), meaning that Monzo is now a bonafide member of the U.K. fintech unicorn club, joining recent entrant Revolut.
Meanwhile, the bank upstart is also planning to launch a large crowdfunding round later this year. Like a lot of other fintechs – and before it was fashionable – Monzo has historically opened up its fundraising to its passionate community and other armchair investors.
In a brief call earlier today with Monzo co-founder and CEO Tom Blomfield, he told me the new funding will be mainly used for increasing headcount to further develop the Monzo product line and to cover other operational costs that the challenger bank has reached " contribution positive margin ".
In other words, on average each customer is generating more revenue than the cost of servicing their current account, which is undoubtedly evidence of how much progress Monzo has made over the last year. This includes bringing down costs, such as debit card costs and debit card fees.
Blomfield is one of the world's largest sources of income, with interest rates, and interest rates, and interest rates. fees (the money Monzo makes any time you spend on your Monzo debit card).
Another revenue stream is the nascent Monzo marketplace, which he says will be the next focus going forward now that the Monzo current account, with the omission of savings accounts and cash deposits, is basically "done".
That's noteworthy given that Monzo embraced developers extremely early on in its existence, holding a very strong hackathons and conducting a few early-stage pilots, but to some extent, but also to the frustration of the market. more UK fintech ecosystem and developers. The exception being the recent integration with TransferWise for sending money abroad.
Blomfield does not dispute this framing but says it was not that Monzo the features of the current account had to be short-term priority. Now that heavy lifting is complete and reinforced with new operational capital, it is marketplace game on.
To that end, the Monzo CEO says it's over the next year, from around 450 now to 900. And in terms of customer growth, extrapolating stats from a recent Nationwide annual report (PDF link), the challenger bank says it now accounts for 15 percent of all new accounts opened in the UK It also says it has 800,000 monthly active users.
Account switching – what is customers selling their existing bank – still makes up the bulk of customer acquisition, even if Monzo recently began targeting 16-18 year olds who would be ready for their first ever bank account. Another key metric: Monzo is now around 26 percent, but I'm told that this is not important for Monzo correlation with engagement or those accessing a Monzo overdraft.
Asked what Monzo's biggest challenge will be over the next year, his CEO does not slim his words: "Increasing revenue," he says. This means that its lending models are correct (ie avoiding too many defaults as it scales) and steadfastly growing the marketplace and third-party product partnerships that will bring in additional revenue.
I was also intrigued to see a venture capital firm once again backing the U.K. challenger bank – many of its existing backers have a U.S. bent and blomfield has made no secret of its ambitions to expand across the pond at some stage. Adam Valkin (who was previously at Accel in London where he invested in GoCardless, which Blomfield also co-founded), gave me the following statement:
We're investing in Tom and his team because they're delivering a high-quality banking experience for consumers. Today's incumbent UK banks represent trillions of market cap but are low on NPS scores, reflecting their inability to meet their customers' needs. Monzo, in contrast, built builds product and banking features in a community-driven approach based on customers' feedback and requests. This is a very strong growth, strong retention and commitment, and an unprecedented customer for Monzo trust. Beyond this, Tom and the Monzo have been working on the traditional business model of banking, removing the traditional offline retail-based banking model in favor of a highly scalable and lower-cost mobile-only experience. All of this creates the potential for a market leading to a leading U.K. bank, launching a successful financial marketplace, and eventually expanding internationally.
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