Top 10 challenger banks by valuation and funding
It’s been a record year for fundraising across the challenger bank space. This year alone, twelve challenger banks raised $100 million according to Financial Technology Partners, and now six of them are valued over $1 billion.
Before another year rolls on, we thought it was important to round off 2019 with a list of the top ten challenger banks according to their estimated valuations and money raised to date.
Data for funds raised this year and funds raised overall is taken from Crunchbase, whilst valuations are taken from various sources as stated below.
Funds raised in 2019: $400 million (26 July 2019)
Total funds raised: $1.1 billion (26 July 2019)
Estimated valuation: $10 billion (29 July 2019), according to Crunchbase.
Dubbed the largest fintech in Latin America by the 2019 Fast Company ranking, this neobank is the second most funded Latin American start-up after ecommerce shop Rappi. It began in Brazil, focusing on providing the country’s unbanked population with credit cards. In October 2019, the start-up hit 15 million customers, representing a 25% increase in just two months. In the same month, it was revealed the neobank’s app had been downloaded 18 million times in the past year, beating Monzo, Revolut, and N26’s app download figures combined, according to Apptopia figures.
Funds raised in 2019: $700 million (5 March 2019 & 5 December 2019)
Total funds raised: $808.8 million (5 December 2019)
Estimated valuation: $5.8 billion (5 December 2019), according to CNBC sources.
Managing to quadruple its valuation in less than a year to $5.8 billion from $1.5 billion in March 2019, US neobank Chime has undoubtedly had a huge year. With 6.5 million customers now, up from 1 million last year, the challenger says it attracts 150,000 direct deposit users a month on average. This said, the challenger did experience significant downtime in October which saw millions of users unable to use their debit card or pay bills.
Funds raised in 2019: $470 million (9 January 2019 & 17 July 2019)
Total funds raised: $692.8 million (17 July 2019)
Estimated valuation: $3.5 billion (17 July 2019), according to TechCrunch.
The German challenger bank raised the first part of its Series D round in the first month of the year, setting a clear agenda to expand into the US which it achieved in August 2019 after a successful launch in Brazil in just a month after the initial funding announcement. Sharing its ambitions this summer to list on the stock exchange in three to five years’ time, the neobank’s movements this year seem unphased by the April 2019 reports that the German regulator BaFin had ordered the challenger to address staffing, outsourcing and engineering issues.
Funds raised in 2019: $440 million (8 February 2019)
Total funds raised: $1 billion (8 February 2019)
Estimated valuation: $2.8 billion (8 February 2019), according to CNBC.
The business and property loan provider for small to medium businesses (SMBs) raised a hefty $440 million venture round at the beginning of this year, before partnering with ClearBank in the same month to provide real-time payments and agency banking. However, this month the fintech lender saw two of its property-backed loans default, ending its impressive four-year-streak without any loans going bad. The loans are “less than 1% of the bank’s £3 billion net lending and have not yet led to credit losses”, The Sunday Times reported.
Funds raised in 2019: $151.7 million (25 June 2019)
Total funds raised: $433 million (25 June 2019)
Estimated valuation: $2.7 billion (25 June 2019), according to The Sunday Times.
Becoming another European challenger to expand into the US this year, Monzo has seen a big year of product change. Just five months after the bank launched its premium paid plan Monzo Plus, the challenger had to pull it in September 2019. A month before this, the bank had also entered into the short-term loans space. Change reached the executive team too. Chief operating officer (COO) Tom Foster-Carter quit to focus on a grocery start-up, whilst ex-Nationwide, RBS and Barclays employee Lisa Nowell became its new chief risk officer (CRO).
Funds raised in 2019: Venture round – value unknown (27 March 2019)
Total funds raised: $336.9 million (26 April 2018)
Estimated valuation: $1.7 billion (26 April 2018), according to Forbes.
Revolut’s figures are the most out of date on this list, largely due to the unvalued venture round which took place in March 2019 and the imminent $500 million funding round which is hotly anticipated along with a $1 billion convertible loan from JP Morgan that will turn into company shares if the challenger gets a US banking licence. These capital injections will see the neobank hit anywhere between a $5 billion to $10 billion valuation. Launching in Australia and Singapore this year, Revolut is on track with its expansion plans, part of which is a 3,500-person hiring spree.
Funds raised in 2019: $100 million (22 July 2019)
Total funds raised: $227.5 million (22 July 2019)
Estimated valuation: “nearly $1 billion” (23 July 2019), according to TechCrunch.
Still edging its way to unicorn status since the summer, the US part-banking, part-lending and part-wealth management app says more than 5 million customers use the app now. The company is now planning to expand its product offering, including 0% APR daily cash advances to help with short-term cash flow issues, a high-yield cash account, and a stock trading platform which allows members to invest in individual companies they’re passionate about.
Funds raised in 2019: $150 million (26 November 2019)
Total funds raised: $194 million (26 November 2019)
Estimated valuation: “nearly $1 billion” (25 November 2019), according to Bloomberg.
Argentina’s money management app Ualá is backed by Asian multinational conglomerates Tencent and SoftBank, as well as Goldman Sachs. The November 2019 funding round marked SoftBank’s first ever Argentine investment. With Argentina currently tackling a country-wide debt of $330 billion, fintechs offering transparency in payments are welcomed by citizens and investors.
9. Starling Bank
Funds raised in 2019: $205 million (13 February 2019, 22 February 2019 & 24 October 2019)
Total funds raised: $263 million (24 October 2019)
Estimated valuation: Valuation not disclosed
Despite beginning the year with a passport security vulnerability which was revealed on Twitter by an Arcadia Group head, the challenger has had a big year of funding with two rounds and a hefty $100 million grant. Promising to use the grant to create 398 new jobs, the neobank will certainly be needing the man power after hitting the 1 million customer milestone in November 2019. And despite losing its co-founder to a cryptocurreny exchange, the challenger has pushed on with product launches including its dual currency debit card.
Funds raised in 2019: None… yet.
Total funds raised: $74.3 million (24 October 2019)
Estimated valuation: Valuation not disclosed
Tipped to be the UK’s next challenger bank unicorn, the Financial Times reported in April 2019 that Tandem is in the process of putting together a round which would top the £80 million it raised in 2018. Yahoo Finance UK then reaffirmed this information, quoting a Tandem spokesperson who said it was poised to announce a “large” funding round in Q4. With more than half a million customers in the UK now, the challenger also announced its plans to expand in Hong Kong this year and undergo an IPO within the next few years.