Two weeks ago, I wrote about failure and began thinking I need to find reasons to be cheerful. The easiest way to find cheer is to think about success. I’ve always come to fintech with a wide net: watching as emerging technologies and business models influence incumbent bank projects and culture, in addition to the plethora of new tech players in the space, both adding to and disrupting the existing financial services ecosystem.
How all these players interact and impact each other is what interests me. The endless, alphabetically named funding rounds, less so.
Don’t get me wrong, working capital is essential to keeping a business going. But during the age of free-flowing venture capital money (well, for some people. Women and people of colour never experienced the golden age of VC money for start-ups — fintech or otherwise) there was something slightly dispiriting in celebrating a founder’s ability to charm investors.
There are many in the wider macroeconomic world who are now questioning the priority given to shareholder value over customer benefits or employee wellbeing, which has been the prevailing operational mindset for most capitalist endeavours over the past few decades.
My first shock, when I dove headfirst into start-up land in 2015, was to discover exit plans were a more popular discussion topic than product development or regulatory compliance. If anyone tries to persuade you that the driving force behind the tech start-up entrepreneur world is ‘finding a problem to solve’ as opposed to ‘return on investments’, there is a 155-year-old bridge in New York you could probably buy as well.
Honestly, I’ve never really written nor cared about funding rounds. However, now that those announcements are few and far between, what should we celebrate?
What I am looking for is a great product — whether that be a great product for a bank or one that really, actually, makes people (non-fintech nerd people) think ‘do we need a bank?’. I want to see who is granted a licence by regulatory authorities. Regulators aren’t in business to stifle innovation; they are there to protect consumers. If you can’t play nice with the regulators, why should I think you’ll play nice with the average fintech customer on the street?
Finally, in this new age of higher interest rates and hard-to-charm money, I’m interested in whether you are making a profit (or at least making enough to sustain your operations).
Here are two ‘reasons to be cheerful’ fintech things I read this week.
Neo, a cross-border payments and foreign exchange fintech company, recently announced annual revenue in excess of €5mn and an annual profit of €1mn. The company supports small to medium-sized businesses looking for alternatives to banks for managing their international business needs. The Barcelona-based fintech saw its cleared volumes double in under a year, reaching more than €7bn in 2023.
“Over the past year, we have experienced exponential growth across our customer base, volumes and revenues,” says Laurent Descout, co-founder and CEO of Neo. “Turning Neo into a profitable fintech was our main objective for 2023 . . . This helps us stand out against some VC-backed fintech players which have struggled with a lack of profitability. This is a very positive message for our shareholders, clients, supervisors and banking partners. Being financially independent will help us continue to grow our success and enhance our offering as we rebuild corporate finance from the ground up.”
If that wasn’t enough, Dutch fintech favourite Bunq has also reported a full year of profitability as it plans to expand into the UK. Bunq reported €53.1mn in net profit in 2023, becoming Europe’s second most profitable neobank.
In its first move outside the EU, Bunq has applied for an e-money institution licence in the UK. The fintech company is also waiting on a banking permit to operate in the US.
In the last quarter of 2023, Bunq’s gross fee income grew by 20 per cent, compared to the last quarter of 2022, and user deposits grew almost fourfold, from €1.8bn to almost €7bn at the end of 2023. Gross interest income in the last quarter of 2023 grew by 488 per cent, compared to the same period in 2022.
Recently, Bunq launched Finn, a generative AI platform that addresses nearly half a million queries on budgeting and transactions.
Reason to be cheerful indeed.
You can connect with Liz on LinkedIn, or follow her on Bluesky.
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