“Full-stack” banking start-up Monzo receives £2m
New smartphone bank hopes to build on Passion Capital investment to raise additional £15m before launch in 2016
Mobile-first banking start-up Monzo has secured £2m from tech venture capital firm Passion Capital.
Set to launch in limited beta in the next month, London-based Monzo is building a digital current account designed for smartphones with no physical locations.
As well as being mobile-first, the start-up will be writing its own “full-stack” banking software to avoid “the outdated infrastructure of legacy banks” and to allow it to process “enormous amounts of data in real time”.
The business says that, using its software, it will be able to warn customers if they are about to go overdrawn before they do based on historical spending, data and salary. It also intends to be able to lend out customer deposits as “transparent” overdrafts.
The company is currently attempting to secure a full UK banking licence from the Bank of England and hopes to raise between £15m and £20m before its official launch, with a full current account not expected until the first half of 2016.
Tom Blomfield, Monzo co-founder, commented: “Our big advantage is that our cost base is something like 1% or 2% of a traditional bank. The big banks are stuck, their IT systems are creaking under the strain, they really aren’t solving the day-to-day problems that face us as consumers.
“Clearly a number of other start-ups are also coming to market, and I’m really excited to see how the landscape changes over the next few years. We’re taking a different approach by building and supporting our IT systems in-house, combined with a full banking licence.”