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

Lynsey Barber
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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, 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.

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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.

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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.

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