British neobank Monzo raises $610 million in funding round to break into U.S. market and introduce pension plans

Monzo, a British neobank, announced that it has raised an additional $190 million in funding, bringing the total raised this year to $610 million. This funding round included new investors such as Hedosophia, CapitalG, and Singaporean sovereign wealth fund GIC. The latest funding values Monzo at approximately $5.2 billion, showing an increase from its previous valuation of $5 billion. The CEO of Monzo, TS Anil, stated plans to use the funds to build new products and accelerate international expansion.

Anil emphasized Monzo’s mission-oriented focus on providing a single platform for all financial needs, rooted in a customer-centric business model. Monzo turned profitable last year and plans to diversify income streams through lending and savings products. Anil also revealed plans to launch a pensions product in the next six to nine months, putting Monzo in competition with traditional lenders. The firm aims to ramp up profits through these new offerings.

Monzo has experienced rapid growth with over 9 million retail customers and 400,000 business customers in the UK. The company ventured into investments last year, offering customers the ability to invest in funds managed by BlackRock. Additionally, about a third of Monzo users had never invested before, highlighting the platform’s appeal to novice investors. International expansion is a key focus for Monzo, especially in the US market where it faces tough competition from major incumbents.

In the US, Monzo recently hired a new CEO and is focusing on product development to ensure competitiveness with established banks like JPMorgan and Citibank. European expansion is also part of Monzo’s long-term plans, although a specific timeline has not been confirmed. Monzo is also gearing up to launch a mortgage product, further challenging traditional banks in the lending space. While an IPO is on the horizon for Monzo, Anil emphasized the importance of growing the company at scale before considering such a move.

Overall, Monzo’s recent funding round reflects confidence in the neobank’s growth potential and strategic vision. With plans for new products, international expansion, and entry into mortgage lending, Monzo is poised to shake up the financial industry and further establish itself as a leader in the digital banking space.