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Fintech

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.

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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.

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