Challenger bank Monzo, known for its hot coral cards and easy-to-use app, has closed a new £85 million investment round that sees the fintech valued at £1 billion.
Monzo is the latest start-up to reach the coveted unicorn status (when a private company is valued at $1 billion or more), following in the footsteps of fellow fintech Revolut and cyber security start-up Darktrace, this year. It’s going to be raising more funds later this year in a crowdfunding round that will allow fans and customers to own a slice of the bank too.
That’s not the only milestone Monzo has hit recently: it now has one million customers, says it counts for 15 per cent of all new bank accounts opened each month in the UK, and was named the best tech start-up to work for by LinkedIn UK.
For Monzo’s founder and CEO, Tom Blomfield, hitting one million customers was more important than being crowned a unicorn.
“It’s dangerous to see investment as an achievement. You end up optimising for ever bigger investment rounds which is not the goal – it’s to build a product that helps people and they genuinely love,” he told the Standard. “We were more excited internally about hitting one million customers – that was a sign to us that a million people were using this product that we created.”
With so many challenger banks breaking onto the scene, it’s not just the colour of the cards which helps Monzo stand out against the competition. It’s the bank’s pledge to make its money work for everyone that has had investors and customers flocking to it alike.
This year it debuted an initiative to make it easier for people without a fixed address to get a bank account, say someone who is homeless or a recent refugee or immigrant to the UK. As well, Monzo has also been congratulated for its gambling block feature which allows customers to self-exclude from gambling transactions, particularly if this is something they have struggled with in the past.
Blomfield believes Monzo has a moral obligation to implement these type of features. “Too many big companies claim to be at best a-moral. For example, Facebook saying we’re just a platform, Google saying don’t be evil. If you’re going to build a globally impactful company, you have to appreciate what impact that company is going to have on society, and I think there’s an obligation to make that impact positive,” he said.
It hopes to roll out more features in this vein that really help people deal with their money issues and will be using this recent investment to hire more staff that can create and implement more products.
High-cost credit is one issue on the Monzo hit list.
“It’s a really tricky one,” said Blomfield. “That people who can’t get access to borrowing or can only do so at massively punitive rates, or have already found themselves in a massive spiral of debt. Hopefully, we can start to have an impact there.”
Whilst becoming a unicorn and gaining one million customers are major markers for the three-year-old company, it seems like Monzo is just getting started.
“On the front page of our investment deck, in the very first round, we said we're building a powerful financial control centre for a billion people around the world. That's maybe not the next step, but the next three or four steps,” said Blomfield.
What’s for certain though is that banking is going to start to look very different. “I think there's a big, big change coming in retail banking. I think the blockbuster moment is coming for the big banks and they're just starting to wake up to it,” he added.