Right that new buzzword is a topic of discussion by my many. From my daily interactions with people in the financial industry, I can understand that everyone knows fintech is coming. The reason for that is simple. The way financial institutions operate needs to change. It is interesting to understand whether the upcoming change can create new profitable companies. Before we look at profits, lets try to define what is a fintech. The word itself is a combination of finance and technology. In other words, the term is commonly used to describe companies that are developing new technology. In addition, that technology is aimed to streamline, automate and improve the access to financial services. Often it is a piece of software that helps institutions and individuals better manage their financial operations. Fincog, is a Dutch niche consultancy. They have produced the following info graphic.

Fintech Profitabilty
This is how the profitability of the neobanks looks like according to Fincog.

Fintech profitability?

The info graphic is clear. For instance, it shows that the well known names in the sector are innovative. At the same time most of the players are not profitable. About two years ago, Tom Bloomfield the CEO of Monzo, the British neobank shared the following view. ” The more you grow, the more you lose and you have to turn that corner at some point… Getting to profitability is not a goal we are prioritising over delivering customers real value. If that takes 10 years, we are committed to it.” There are questions that can arise from that statement. For example, for how long investors will fund such innovation. Also, is more QE necessary to allow the sector change further?

We live in very interesting times for the financial industry. This is for sure. To keep up to date with the latest in the sector I recommend you to have a look at the Boris Daily Read. Chances, you will find a lot of useful information.

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About the author

Boris Grozev is a seasoned fintech executive. Entrepreneur by heart Boris has helped number of businesses to create and implement business development and product enhancement strategies. His advisory work in Emerging and Frontier markets has promoted culture and technology change, fostered innovation and lead to tangible results. He invests in variety of asset classes and shares his experiences from the journey to financial independence. Boris is a fast learner, whose leadership abilities, ambition, stamina, passion to succeed and attitude naturally spread to others helping to achieve common goals.

Boris is a financial professional fascinated with new technology, investor and a highly energetic individual with proven track record of overachieving extended sales and product delivery targets both as an individual as well as managing teams.

One Comment on “Are fintech challenger banks profitable?

  1. Pingback: What is the mindset shift driving fintech innovation? - Boris Grozev's Blog

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