Atom Bank has raised £100 million and will announce within weeks
Chairman Anthony Thomson announced last August that the bank planned to raise £100 million in the first quarter of 2017. Thomson confirmed to Business Insider that Atom Bank will be announcing a funding round "of that order ... in the next few weeks.""To date, we've raised £135 million. We will just be announcing the closing of our next capital raise in the next few weeks," Thompson told Business Insider.
"We've been well supported by our existing shareholders," Thomson said, declining to name specific investors in the round. Thompson said last June's vote for Britain to exit the European Union has not affected funding efforts.Atom is one of a number of app-only, digital banks that have started up in the UK over the last 18 months. Others include Monzo, Starling, Tandem, and Tide.
"At launch, we raised more money than any other bank in the UK had raised to launch," he said. "That includes my previous bank. As of today, I think I'm right in saying we have raised more money than all of the other digital banks put together. We have the capital to build a substantial bank."Thomson added that Atom plans to raise another £100 million towards the end of next year before pursuing a public listing."We always said in our plans that we would have another capital raise towards the end of 2018 and that would be the last before an IPO. We talked about raising roughly £100 million towards the end of next year."
Prior to helping set up Atom, Thomson helped to run Metro Bank, a startup bank in the UK pursuing growth through a branch network. Metro's founder Vernon Hill told Business Insider he thinks app-only banks are "all hype" and can't succeed.
Addressing his former business partner's criticism, Thomson told BI: "We have consumer deposits, we're growing our business loans, we've issued more mortgages than I recall we did in Metro Bank in its first year. We're off to a good start."If one looks at the data, bank branch transactions declined 40% in the last 5 years and the rate of pace of decline is increasing. Telephony as a means of banking is in decline and last year for the first time ever, fixed desktop internet banking declined, admitted only by 2%. The explosive growth was in app-based transactions."
He added: "Opening a bank today with branches would be like BT putting telephone kiosks back on the high street. The world's just moved on."
Atom launched to the UK public last year with a highly attractive fixed savings product that offers upwards of 2% interest, which has helped the bank attracted over £100 million in deposits. Thomson said Atom can afford to offer this high-interest product to customers "indefinitely.""One of the underpinnings of a bank that's based on mobile devices, particularly one that's based as we are in the North East, is we are a very, very low cost model," he said. "We don't have legacy branch networks, we don't have legacy IT platforms, we don't have legacy balance sheet or regulatory issues.
Atom currently only offers savings and mortgage products to consumers but Thomson says the bank will launch current accounts in the second half of 2017.Atom Bank made a loss of £22.5 million last year on income of £46,000. Thomson said it will take the bank three years to break even.
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