Atom bank, the only major FinTech “challenger” bank based outside of London (its HQ is in Durham), has apparently completed a £100m equity funding round which it plans to announce within the next few weeks.
If true, the funding could deliver a knock-out blow in the battle to be the UK’s most influential challenger bank, i.e. a modern, mobile based bank capable of providing all the services of a traditional high street bank, without the hidden charges and with a dab of disruptive, entrepreneurial brilliance.
Besides Atom, Starling, Tandem and Monzo are also aiming to be the modern millennial’s go-to bank. Monzo was, in fact, founded by an ex-Starling founder – which gives you an idea of how competitive, and congested this space has got.
Atom Chairman Anthony Thomson announced last year in an interview with Business Insider that he intended to raise significant funds during Q1 2017 and it looks as if he has been as good as his word.
Existing investors Toscafund Asset Management, Spanish bank BBVA, Atom’s biggest shareholder, and star stock-picker Neil Woodford will provide the funds, and help bring Atom’s total funding raised to $292m across 3 rounds.
Now, nobody can argue that these are not impressive figures – and more evidence, if it were needed, that London really is the home of the Fintech disruptor.
However, with big investment rounds comes the ceding of control of your business. All of the “challengers” are now backed by large corporates, many of them banks; so how can you disrupt the banking industry when you are effectively owned by the big banks?
Well, the answer is you still can – this is the underlying principle behind Fintech startups, which are essentially a bet by a founding team that they can develop a product faster than an internal team at a big bank.
If they can, sure there’s a high chance the bank will simply buy the company out. But that is what we call an exit strategy, and in the UK, these are practically inevitable – founder sells product back into bank, bank successfully disrupted.
So, maybe Atom will never be as big as BBVA; but it will more than likely become a unit within a better functioning, more efficient, fairer BBVA.
Here’s hoping – just don’t expect to walk into a high-street branch of Monzo, Tandem et al anytime soon. Breaking into the elite as a separate entity is just as hard as ever.