Digital challenger bank Monzo has raised its valuation to £2bn following a fresh funding round.

In the latest round, the bank raised £113m in capital from a group of investors led by Y Combinator.

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Other investors such as Latitude Venture Partners, General Catalyst and Stripe among others also participated in the round. It plans to utilise the new funding to support its global expansion and bolster its business in the UK.

Monzo now surpasses its rival Revolut to become the second most valuable fintech in the UK after OakNorth, reported The Guardian.

At the end of its last funding round of £85m in October last year, the company was valued at £1bn.

Last month, the app-based bank reached the 2 million user mark growing rapidly since its launch in 2015. It reached the milestone eight months after it crossed the one million account mark.

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Now, the bank aims to touch three million in the following months, supported by its global expansion plans. In its website, Monzo claimed to sign up around 35,000 new customers every week.

The digital lender is particularly popular among the young millennial customers in the 20 to 35 year age-group. It offers a current account and a debit card to customers.

Recently, Monzo formally announced its expansion to the US. The initial launch included the roll-out of its app-based checking account and a few thousand debit cards.