Expectations and requirements of customers related to the banking sector are radically shifting in the modern world. It is the primary reason behind the success of so-called challenger banks that have emerged with the use of latest IT strategies. Monzo is a popular digital bank in Britain that allows customers to conduct transactions from the comfort of their smartphone. With good features, coral-colored cards and fancy app, Monzo has been able to double its customer base within 9 months to reach 2 million customers.

Monzo recently raised over $144 million in the latest round of funding that was led by Y Combinator, a US start-up accelerator. The same accelerator also helped companies like Stripe and Airbnb during their early phases. Funding in Monzo was raised by the accelerator’s Continuity Fund that is specific for late-stage start-ups. With the successful round of funding, Monzo’s value reached $2.5 billion, which is double than what it was worth in October last year.

A spokesperson for Monzo told that the tech company is well capitalized already but it is looking forward to using extra capital to implement its growth strategy and gain momentum in the US. The banking startup is planning to expand its operations to various major cities of the United States including Los Angeles.

The major factor for Y Combinator to invest in Monzo has been its engagement metrics that replicate metrics of a social network, i.e. doubling within a few months. Monzo holds community events and an online forum that allow its customers to directly interact by asking questions and providing feedback. Monzo has several key competitors that may range from British tech firm Revolut to American firm Chime.

However, in spite of challenging the conventional banking system, Monzo continues to face a serious challenge itself. The digital bank fails to make real money even though it continues to increase its customer base. The situation has improved a little recently as it has started making four GBP for each customer that signups on its platform against loss of 15 GBP for each customer previous year.

Monzo told that the company is very clear about making Monzo a sustainable business in the long run. The firm is considering a ‘marketplace model’ that involves offering other providers’ products, such as savings, and integrates them within the app. Some other digital banking start-ups have gone down the same route previously and often found it to be a successful strategy.