Digital challenger Atom Bank is looking to raise £40m from existing investors as it targets an IPO in the next few years.
The neobank Atom is confident it will move to profitability from its mortgage and business lending “within a year”.
The optimism contrasts with its fintech peers which have faced difficulties since the outbreak of the pandemic. The most well known challenger banks like Monzo rely on debit card transactions as their main source of revenue which has taken a hit across three national lockdowns.
By contrast Atom has capitalised on the rebound in demand from homebuyers and reduced competition, as well as the government’s lending schemes to bolster its balance sheet.
The bank is set to triple its business loans to SMEs to £700m by the end of March, which it said had been achieved through the Coronavirus Business Interruption Loan Scheme (CBILS) as well as those independent of government backing.
Atom recently inked a deal with open-banking fintech Plaid to further grow its offering for UK SMEs.
Since its launch Atom has loaned £2.8bn to mortgage customers and has added £362m of mortgages in the second half of the year.
And as other challengers like German neobank N26 start to eye an IPO, Atom Bank is set to follow.
“The team retains an IPO as our objective and we’ll take the business there when we and the markets are ready,” chief executive Mark Mullen said. “After the year that’s just gone I’m not going to claim perfect foresight, but we’re looking at the financial year 2022/23 as our IPO target.”