Loot announces today that it has just closed an investment round raising a further £2.5m (added to the £1.5 seed capital they raised last year), from their existing investors, including SpeedInvest (Holvi, Curve) and Global Founders Capital (iwoca, Kreditech, Facebook) and a small number of new angel investors.
Loot v2 will launch next week to the “Loot Legends” – existing Loot customers that have been using version 1 of the service up to now. Loot v2 offers an impressive range of new functionality, providing a revolutionary new type of banking service aimed at millennials and anyone using their smartphone to do many things at once .
Through November, the more than 20,000 new customers that signed the Loot v2 waiting list opened in the summer will have their accounts activated and will start using the new service. The new funding will be used to grow this user base as fast as possible, building on these first 20,000 quickly and cost-effectively.
Loot’s competitors in the UK smartphone banking arena (Monzo, Atom, Starling etc) all appear to be turning themselves into incumbents rather than challengers by going for their own banking licenses up front, tying themselves into HUGE capital and regulatory requirements, and the massive challenges of running their own balance sheet safely and successfully with small, fledgling deposits and lending. It is a huge distraction from building a revolutionary banking experience for the customer. Their approach creates very significant risk for the business itself, its investors and its customers who will have the additional worry of banking with a new player without the financial security of an enormous balance sheet as with the established banks.
This is a very far cry from being the fleet of foot, customer-centric, leading-edge technology play that Loot is. Loot will almost certainly go for its own banking license in time, but only once it has raced ahead of the rest with market-leading functionality (the thing that customers are looking for) which will attract a larger and more loyal user base, faster. This approach will mean the race can be won with what really matters to the customer, and then the task of getting the license and running a successful balance sheet will be much easier because of the scale already achieved. This approach also means that attracting the much larger investment necessary for seeking a banking license is deferred, and will be easier as scale and momentum will already have been achieved.