• U.K.-based digital bank Monzo has raised $430 million (£340 million) in a round led by Alphabet-owned CapitalG.
• The funds come about a year after Monzo achieved profitability, having reached nine million customers.
• Monzo’s post-money valuation is now $5 billion, up from $4.5 billion in 2022.

U.K.-based digital banking platform Monzo has raised $430 million (£340 million) in a round led by Alphabet-owned CapitalG.

Also participating in the round, which was first rumored last week,  were new investors, Google Ventures and HongShan Capital, along with existing contributors Passion Capital and Tencent. The new round boosts Monzo’s post-money valuation to $5 billion (£4 billion), which is up from the $4.5 billion valuation it received in 2022. According to Crunchbase, Monzo’s total investment amount now stands at $1.5 billion.

“With backing from global investors, we have the rocket fuel to go after our ambitions harder and faster, building Monzo into the one app that sits at the centre of our customers’ financial lives,” said company CEO TS Anil. “Each milestone we’ve reached to this point has given us more strength and speed to make strides towards our mission – now we’ll scale to even greater heights and seize the huge opportunity ahead.”

Monzo plans to use the funds to fuel expansion and to help the company improve its product roadmap. The timing of the funds, combined with the company’s expansion ambitions, come at a good time. That’s because, since it was founded in 2015, Monzo has acquired nine million users– two million of which were brought on just last year. This growth, combined with higher interest rates, pushed Monzo to achieve profitability in March of last year.

Monzo originally launched in 2015, the early days of digital challenger banks. In the U.K., the company offers both personal and business accounts that feature current and savings accounts, unsecured personal loans, and investment funds powered by BlackRock. U.S. users are limited to personal and joint checking accounts, but have the option to aggregate data from other financial services providers in order to get a holistic picture of their overall financial standing.

According to Monzo’s public roadmap, the company is currently working on budgeting improvements, paying interest on savings balances, and a faster onboarding experience. For the future, the company plans to develop digital billpay, capabilities and the ability to send checks, and also has stretch goals to launch a check depositing feature, subscription management, and merchant spending rules.

Photo by Mikhail Nilov

• Zūm Rails landed $7.78 million (CAD $10.5 million) in a Series A funding round led by Arthur Ventures.
• The company will use the funds to scale its U.S. growth and to further expand its payments offerings, including the launch of new banking-as-a-service features.
• Zūm Rails currently processes more than $1 billion in payments through its platform every month.

Canadian fintech Zūm Rails (pronounced zoom rails) brought in $7.78 million (CAD $10.5 million) in funding this week. The Series A round, which was led by U.S.-based Arthur Ventures, marks the company’s first VC funding round.

Founded in 2019, Zūm Rails seeks to make the payments experience less disjointed by integrating open banking and instant payments into a single gateway. This removes the need to stack technologies on top of one another and ultimately creates a better and more secure customer experience. The company launched in the U.S. market late last year, leveraging partnerships with Visa Direct, Mastercard, and MX.

Zūm Rails will use today’s funds to scale its U.S. growth and to further expand its payments offerings. Specifically, the company plans to launch new banking-as-a-service features for merchants and has plans to unveil a FedNow offering in the U.S. that will enable businesses to send and receive FDIC-insured payments in near-real-time. FedNow, the U.S. government’s real time payment service, launched last July.

“We’ve brought open banking and instant payments together in an omni-rail solution that enables companies to check off all of their payments needs from a single gateway,” said Zūm Rails Co-founder and CEO Marc Milewski. “With Arthur Ventures’ investment, we’re positioned for further expansion of our solution through the addition of banking-as-a-service and other new capabilities.”

As part of building out its U.S. operations, Zūm Rails has been working with financial service providers such as Fiserv to democratize access to open banking capabilities and real-time, FDIC-insured payments for businesses. “Having already transformed the Canadian payments landscape, the company is well-positioned to increase this growth with the investments it’s making in its product and scaling its presence across all of North America,” said Arthur Ventures Vice President Jake Olson.

As for what’s next, company Co-founder and Chief Sales Officer Miles Schwartz said that the company’s long-term vision transcends its individual capabilities. “Integrating these capabilities into a single solution that makes businesses’ lives easier will continue to be our focus as we double down on our expansion in the U.S.,” explained.

Zūm Rails, which up until now has been self-funded, currently processes more than $1 billion in payments through its platform every month. Among the company’s clients are Questrade, Coinsquare, and Desjardins.

Photo by Jonathan Petersson