Digital challenger Atom Bank is seeking to raise millions more funding from new and existing investors

 
Lynsey Barber
Follow Lynsey
Atom Bank's savers have deposited close to £1bn (Source: Atom Bank)

One of the UK’s top digital challenger banks, Atom, is gearing up to raise fresh funding from investors as it eyes £1bn of deposit holdings, City A.M. can exclusively reveal.

The app-only bank, which boasts music superstar Will.i.am, Neil Woodford and Spanish bank BBVA among high profile backers, has already raised more than £200m to date.

The three-year-old startup is now looking to raise fresh cash to sustain its rapid growth, largely from existing investors but which could also include new ones, a spokesperson for the bank confirmed.

Read more: Banks and startups must collaborate on fintech for UK to remain top

BBVA is Atom's biggest backer, holding a 30 per cent stake, followed by Woodford and Toscafund. All three made an equity investment in February as part of a massive £113m fundraise - one of the biggest to date for a digital challenger.

Early backers of Atom also include private equity veteran Jon Moulton and Jim O’Neill, the former chairman of Goldman Sachs Asset Management. It also raised £30m in debt financing from the British Business Bank over the summer.

Founded by the former chairman of Metro Bank, Anthony Thomson, and the ex-chief executive of First Direct, Mark Mullen, Atom offers savings, mortgages and small business lending. Saving deposits at the bank grew from just over £500m at the end of March to £900m in October and are poised to surpass the £1bn mark.

Read more: Europe's most active fintech investor wouldn't rule out investing in ICOs

Plans for current accounts were paused over the summer, but remain in Atom's plans. It is waiting to see the outcome of Open Banking, which will bring in a standard for banks to share data with startups.

Atom's latest funding round, expected to close next year, follows a fresh injection of cash for rival digital banks and a wider boom in fintech funding. Monzo raised £71m and is eyeing a further £30m via crowdfunding next year, while Starling is seeking to raise £40m. And Revolut has applied to become a fully licensed bank.

Related articles