Goldex white labels gold investing for fintechs
Fintechs are caught in a brutal competitive squeeze between losses on businesses they are good at and the urgent need to offer new ones.
The pandemic has accelerated digital adoption across financial services, with fintechs enjoying extraordinary customer growth in the past 15 months.
Sadly, for their backers, however, few are yet making a profit.
In a note published this week, titled Digital Neobanks: Clients Grow, Losses Grow, analysts at Citi scrutinized four leading UK firms – Monzo, Starling, OakNorth and Revolut – and found their combined customers increased 45% in 2020 to 22 million.
That is almost as many as domestic retail champion Lloyds Banking Group, with 25 million.
Yet average revenue per user for the four neobanks was just £14 in 2019/2020, compared with £370 at Lloyds.
Revolut, to pick the best known, now has 15 million customers, up from 10.2 million at the end of 2019. However, even in a year when it halted marketing and discretionary spending, Revolut recorded a pre-tax loss on ordinary activities of £207.9 million for 2020.
That compares with a loss of £107.7 million for 2019.
In a policy statement in April, the UK’s Prudential Regulation Authority reminded such, for now, non-systemic banks that, as they mature after initial authorization, they should provide greater clarity over the path to profitability.