British app-only bank Monzo said that its backers now value the lender at 1 billion pounds, giving it unicorn status. Supplied

LONDON - British app-only bank Monzo said on Wednesday that its backers now value the lender at 1 billion pounds (R18.6 billion), giving it unicorn status, after it raised 85 million pounds to fund the doubling of its workforce.

That makes Monzo the latest of Britain’s digital banks to reach unicorn status - or a valuation of at least $1 billion without tapping the stock market - after rival Revolut passed the landmark earlier this year.

Monzo, which launched in 2015 and has yet to turn a profit, said its capital value had increased from 280 million pounds a year ago.

Its backers include Passion Capital and Orange Digital Ventures.

Such online-only banks, which hope to win customers from major traditional players with slick apps and cut-price fees, have enjoyed rapid user growth and investor attention since launching in recent years.

Monzo now has 1.1 million users. Chief Executive Tom Blomfield said currently around 100,000 new Monzo accounts are opened each month, at which rate the bank’s user base would swell to 2.3 million in one year’s time.

The funds would be used to double the bank’s workforce to around 800-900 staff to support this, he told Reuters by phone.

“Basically, every department is going to double in the next 12 months.”

Supporting quick user growth has always come at a cost for Monzo, which saw its pre-tax loss more than quadruple to 33.1 million pounds in the year to February. Every new customer initially cost the bank around 65 pounds per year.

However, it has since cut that cost back and launched some lending, helping it to turn those metrics around. In recent weeks the bank has started making around 5 pounds per year from every new account opened, Blomfield said.

He added that a quarter of Monzo users now deposit their salary with the bank, up from 8 percent at the start of the year.

Monzo needs customers to treat their accounts as their main bank in order to make money from its model. That model relies on collecting a wealth of data from customers that the bank can then use to suggest appropriate products or services from a range of providers, taking commission when this is successful.

The bank, which is currently developing a savings account in partnership with a bank, whose name it has not disclosed, also said it would launch a crowdfunding round, open to customers and retail investors, by the end of this year.

The latest funding round was lead by venture capital firms Accel Partners and General Catalyst.

Existing investors Passion Capital, Goodwater, Thrive Capital, Orange Digital Ventures and Stripe also participated.